Paris and London "have confirmed the launch of the preparation works for the Future Cruise / Anti-Ship Weapon," European missile specialist MBDA said in a statement.

Both Britain's Defence Equipment and Support (DE&S) and France's DGA procurement agency confirmed the three-year contract, which MBDA said aimed to develop weapons "to be fielded at the end of the decade".

MBDA's new weapons, a subsonic stealth variant and a "highly manoeuvrable" supersonic version, would replace existing missiles in use by the two countries' navies and air forces.

The two countries had been at loggerheads on defence issues since last year, when Britain and the US struck a deal to produce nuclear-powered submarines for Australia as Canberra tore up an existing contract with France.

French Defence Minister Florence Parly had said in October that the missile project was "in difficulties, given the state of our relations with the UK".

But j

oint British-French missiles have been on the cards since the neighbours signed the Lancaster House treaty in 2010, solidifying close defence ties.

Britain and France account for 60 percent of European defence spending and 80 percent of defence research and development outlays between them, far outstripping Germany and keeping London a key military partner for Paris even after its departure from the European Union.