The leaders "reached the shared assessment that the companies will not be able to come together on building a joint combat aircraft", a government official told AFP about the Future Combat Air System (FCAS) project.

"They acknowledge this reality."

The FCAS programme was launched in 2017 to replace France's Rafale jets and the Eurofighter planes used by Germany and Spain.

But the multi-billion-euro project was beset by disagreements between the firms involved -- France's Dassault Aviation and Airbus, which represents Germany and Spain.

Abandoning the project will come as a blow to efforts by European countries to cooperate more closely on defence and present a united front as they contend with a hostile Russia and souring ties with the United States.

Despite the move to ditch the joint warplane, the German official said other parts of the wide-ranging project will continue.

"The actual core of FCAS is to be continued as a European system," the official said, describing it as a "nervous system that networks aircraft, drones, and other components into an integrated whole".