In a plan seen as liable to upset Canberra's awkward relations with Indonesia, Defence Minister Robert Hill said the air-to-surface missiles could destroy air and sea targets up to 400 kilometres (250 miles) away.

Australia is to pay 350 million to 450 million dollars (248-317 million US) for the missiles, to be used on F/A-18 Hornet fighters and AP-3C Orion maritime surveillance aircraft and enter service between 2007 and 2009.

"Combined with the new air-to-air missiles and upgraded precision-guided bombs, Australia's fighter jets will be the region's most lethal capacity for air combat and strike operations," Hill said.

However, the Labor opposition said it hampered the fight against terrorism.

"What has it done to explain this to the countries in the region with whom we must be associated in the struggle with fundamentalist terror?" opposition defence spokesman Kim Beazley said.

"As far as I can see, the government has made absolutely no effort. In normal circumstances that would be bad, but in circumstances where we need to be alongside them, it's very foolish indeed."

Hill denied it would trigger an arms race. "In the same way, as Indonesia and all our regional neighbours continue to build their capabilities, they expect Australia to do so," he said.

Prime Minister John Howard said defence decisions were based on Australia's defence interests.

The missiles are intended to substitute partly for the ageing F111 strike bombers, due to be phased out by 2010. A leading military analyst said with the new missiles the F/A-18s would have at best 75 percent of the F111s' range.

Whether it upset Australia's neighbours would depend on how the government explains it, said Aldo Borgu, of the Australian Strategic Policy Institute.

"If the government explains it along these lines it should not be a problem," he said.

Borgu pointed out that Australia's neighbours were also modernising.

"I would not say there's an arms race. There's certainly a military modernisation going on. We don't necessarily live in a benign environment in our region."

The options are Lockheed Martin's Joint Air-to-Surface Stand-off Missile (JASSM), German company Taurus Systems' KEPD 350 precision-attack cruise missile and Boeing's Stand-off Land Attack Missile - Expanded Response (SLAM-ER). A decision will be made next year.

Australia has taken a leading role on North Korea's nuclear weapons programme. It is also concerned about possible terrorist attacks by Islamic extremists.

A recent poll found Indonesia was widely perceived as its greatest external threat.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.