CANBERRA - Japan's ambassador to Australia confirmed on Friday that his country is willing to build the Royal Australian Navy's next-generation submarines in Australia, if awarded the federal government contract.

Japan could work with Australian shipbuilder ASC to deliver the submarines, pending the approval of the Australian government, Ambassador Sumio Kusaka said.

Japan joins firms from France and Germany in revealing they are willing to bring construction to Australia, rather than build the fleet in their home countries, in a deal set to be worth at least 16 billion U.S. dollars, with billions more to be spent on maintenance and upgrades.

The Australian government has told potential suitors that the submarines have to be built locally in order to protect local industry as, without a submarine contract, hundreds of Australian shipbuilders could be left jobless.

Kusaka said Japan was willing to build a next-generation version of its Soryu-class submarine for the Australian navy, which would have a longer range in order to suit Australian conditions and its vast waters.

"We will go along with whatever decision the Australian government makes," Kusaka said, quoted by the News Corp on Friday.

Meanwhile South Australian MP and Industry Minister Christopher Pyne said Australia was spoilt for choice when it comes to deciding on a building partner.

He said by Japan, Germany and France agreeing to use Australian shipyards - most likely in South Australia - the Australian economy would be given a major boost.