Interceptors for the Aegis Ashore system were to be placed in two regions under the costly and controversial programme.

But the government reversed course under pressure from local residents concerned about the risks posed by a missile defence system in their backyard.

"The National Security Council discussed this matter and reached the conclusion that the deployment of Aegis Ashore in Akita and Yamaguchi is to be rescinded," Defence Minister Taro Kono told a meeting of the ruling Liberal Democratic Party.

"I want to deeply apologise that it has come to this."

Later Thursday, Kono said Tokyo and Washington were discussing how to fend off missile threats from Pyongyang after dropping the defence system plan.

"There's a threat coming from North Korea," Kono told reporters.

"We have been talking with the United States on how to improve our ballistic missile defence capability or integrated air-missile defence capability," he added.

"So we are trying to make maximum use of what we have contracted with the United States."

The government had originally guaranteed that interceptor missile gear would not land in residential areas near where the system was based.

But last week, when initially announcing that deployment of the system had been suspended, Kano said maintaining that promise would require a costly and time-consuming hardware upgrade.

The Aegis Ashore system, the purchase of which was approved in 2017, was estimated to cost Japan $4.2 billion over three decades.

However, there have been competing claims about whether initial estimates would fall short of the real cost.

The deal to buy the system was seen both as part of attempts by Tokyo to bolster defensive capabilities after North Korean missile launches, as well as a way to foster closer ties with Washington.

US President Donald Trump has pushed allies to buy more American products, including military equipment.

Japan's armed forces have long been restricted to self-defence and the country relies heavily on the US under a bilateral security alliance.

Prime Minister Shinzo Abe said last week his government was committed to considering alternatives to the Aegis Ashore system.

"There should not be a gap in our country's defences. We want to hold discussions on the necessary measures," he said.