The Norwegian government said that despite signing the contract with NH Industries more than 20 years ago, only eight of the 13 aircraft that have been delivered were fully operative.

Norway will return the helicopters and will demand a refund of five billion kroner ($530 million), Defence Minister Bjorn Arild Gram told reporters at a press conference.

"Regrettably we have reached the conclusion that no matter how many hours our technicians work, and how many parts we order, it will never make the NH90 capable of meeting the requirements of the Norwegian Armed Forces," he said.

The consortium that builds the NH90 includes Airbus Helicopters, Italy's Leonardo and the Netherland's Fokker.

"NH Industries considers this termination to be legally groundless," the group said in a statement.

It said it was "extremely disappointed by the decision ... and refutes the allegations being made against the NH90 as well as against the company."

The cancellation is yet another setback for the NH90 after the Australian army in December retired its helicopters early in favour of Black Hawks made by US manufacturer Sikorsky.

The Norwegian military said that in addition to the delivery delays, it had experienced problems with reliability, maintenance and availability issues with spare parts.

It said its fleet had only managed to fly about 700 hours annually, far from the 3,900 flight hours required.

The aircraft had been intended for use by the coast guard and anti-submarine warfare.

"NH Industries was not offered the possibility to discuss the latest proposal made to improve the availability of the NH90 in Norway and to address the specific Norwegian requirements", the company said.

The Norwegian government said it would soon begin the process of identifying an alternative maritime helicopter.