The Philippines said Thursday it would re-open a former US naval base that was closed more than 20 years ago, stationing its own military hardware at the facility that faces the flashpoint South China Sea.

The announcement comes as the Philippines is embroiled in a bitter dispute with China over rival claims to parts of the sea, including a rich fishing shoal close to the military base.

Defence department spokesman Peter Galvez said the Philippines would station aircraft and naval vessels at Subic Bay, which was one of the US military's biggest overseas bases until it closed in 1992.

"It's location is very strategic," Galvez said, referring to its position facing the South China Sea, which Manila calls the West Philippine Sea.

"If we need to deploy to the West Philippine Sea, it (Subic) is already there, we do not deny that. It's a deepwater port."

After the Americans left, the sprawling base about two hours' drive north of Manila was converted into a trading zone and industrial hub with tax concessions for businesses who set up shop.

The Philippine military has recently leased back some of those facilities from the government authority that manages the business zone, presidential spokesman Herminio Coloma said.

Last year, Manila signed an agreement giving its defence ally the United States more access to Filipino military facilities, as part of plans by the poorly equipped Filipino forces to attain a deterrent capability.

However this deal, under which US forces could potentially have regained use of Subic Bay, has been postponed amid a legal challenge now being heard by the Supreme Court.

China claims most of the South China Sea -- home to strategically vital shipping lanes and believed to be rich in oil and gas -- and is currently pursuing a rapid programme of artificial island construction in the region.

The Philippines is among the most vocal critics of China's claims, and has asked a United Nations-backed tribunal to declare China's claim over most of the South China Sea as illegal.

Following a stand-off between Chinese ships and the weak Filipino Navy in 2012, China took control of a rich fishing ground called Scarborough Shoal that is within the Philippines' exclusive economic zone.

Subic Bay is 198 kilometres (123 miles) east of Scarborough Shoal.

The Philippines said Wednesday it was also repairing a crumbling ship serving as its lonely outpost in the disputed waters.

The move, which will ensure the rust-eaten World War II-vintage BRP Sierra Madre remains livable for a tiny unit of marines guarding Second Thomas Shoal, was lambasted by China, who branded the Philippines a "hypocritical troublemaker and rule breaker".