Israel is planning to revive bids for a sixth Dolphin Class naval vessel with Germany, an Israeli official said.
Israeli Prime Minister Binyamin Netanyahu will raise the matter with German Chancellor Angela Merkel to sell the submarine at a higher discount, on his upcoming visit to Berlin.
Negotiations on the submarine deal were held up last year after Germany declined to underwrite it.
Israel is on a higher defence spending spree due to political unrest in the Middle East and has sought up to a third off the $500m-$700m price for the new submarine.
The diesel-powered Dolphin Class submarines are regarded as an Israeli deterrence against Iran, according to Reuters.
About three submarines of the same class are currently in service with Israel and another two are expected to be delivered in the next two years.