The Israeli business daily, Globes, described the sale as the country's most expensive arms deal.

"Purchasing the most advanced fighters jets in the world is an important step in strengthening the State of Israel's military power," Israeli Prime Minister Binyamin Netanyahu said in a statement after the deal won final approval by a ministerial committee Thursday. Defense Minister Ehud Barak gave his go-ahead in August.

The first of the aircraft are scheduled for delivery in 2015. The deal also includes spare parts, maintenance costs and simulators for pilot training.

Each aircraft costs $96 million. That's considerably less than the $137 million price tag on the F-35 because of lengthy delays in the development program and hefty cost overruns that have set back delivery of the jets by up to two years.

It wasn't clear whether the Pentagon had lowered the price to encourage the Israelis to accept a plan by U.S. President Barack Obama's administration to sell Saudi Arabia advanced aircraft worth an estimated $60 billion, ostensibly to bolster Persian Gulf Arab forces to counter Iran.

Israel acquiesced on that after the Americans agreed not to provide Saudi Arabia with long-range standoff weapons systems that could threaten Israeli security.

Acquiring the F-35, even in limited numbers, would allow Israel to maintain the technological edge over its regional adversaries that the United States has long pledged to preserve.

The F-35 buy was pushed through instead of upgrading Israel's Boeing F-15I Ra'am and Lockheed Martin F-16I Sufa jets.

Israel is the first foreign country to buy the F-35, with which the Pentagon plans to equip the U.S. Air Force, the Navy and the Marine Corps.

Indeed, the 20 F-35s, enough to equip one squadron, aren't likely to involve any significant outlay by Israel since the bulk of the $2.75 billion cost will be financed by U.S. military assistance to Israel.

This currently totals around $3 billion a year. Globes reported Monday that senior military officials "said that $150 million from the defense budget will be allocated for the purchases of the F-35s spread over eight years."

Uri Shani, director general of the Defense Ministry, said that Israel may order further F-35s sometime in the future.

The Israeli air force wanted 75 F-35s but had to trim the initial purchase because of the high cost of the fifth-generation fighter and development program setbacks.

Negotiations dragged on for more than two years. The Israelis wanted their own electronic warfare and communications systems installed in the jets.

They also wanted to expand the aircraft's payload capabilities so it could carry Israeli-made missiles.

The Americans balked at those demands but eventually agreed to allow the incorporation of some Israeli systems.

The Pentagon also initially said that Israeli defense firms would get about $4 billion in contracts from Lockheed Martin, the lead U.S. contractor in the F-35 program.

But now it turns out that deal was contingent on Israel buying 75 of the aircraft, so Israeli firms will get $1 billion-$1.3 billion in contracts related to the F-35.

The Israeli daily Haaretz reported: "The Israeli defense companies are pleased even with the smaller figure and consider this an opening that could be expanded in the future."

Among the companies likely to benefit from these spinoff contracts are Israel Aerospace Industries, flagship of Israel's defense sector; Elbit Systems, a leading electronics outfit; and Blades Technology, part-owned by Pratt & Whitney, which would be involved in the production of engines.

But if the defense industry is happy with the deal, others aren't.

Finance Minister Yuval Steinitz objected to the F-35 buy on the grounds it involved a huge outlay at a time when unmanned aircraft, far cheaper and without involving expensive pilot training, are becoming increasingly important in aerial warfare.

Even the defense companies objected initially, claiming the deal would damage them. Some members of the General Staff criticized the price tag, which they said prevented investment in weapons systems for the army and navy.

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