Germany has agreed to sell the sixth advanced Dolphin-class nuclear military submarine to Israel as well as finance a third of its cost, a senior German official confirmed.
The sale is part of a 2005 agreement between the two nations that included an option that would allow Israel to request another subsidised submarine.
The share of the submarine's cost will be paid from a maximum of €135m ($180m) of funding that was set aside by the German Parliament in next year's budget.
The new submarine is expected to join the Israeli Navy's submarine fleet to replace the ageing Gal-class submarines.
The Israeli Navy currently has three Dolphin-class submarines and is expected to receive two more in 2012, which are currently under construction in Germany.
The vessels can carry nuclear warheads and are capable of conducting long-range security missions along national borders.