Under the deal, concluded in February, Italy has committed to purchase over one billion dollars worth of military hardware from Israeli defense contractors, the statement said.

Monday's announcement capped a fierce competition between Italy and the Republic of Korea (ROK) in recent years to win the tender to sell the IAF their next-generation combat trainer, with the leaders of both countries making a personal appeal to their Israeli counterparts.

Seoul, which proposed to purchase advanced Israeli military platforms and armaments for an estimated 1.5 billion U.S. dollars if its trainer is chosen, responded with anger when the final decision was announced in February, accusing Israel of favoring Italy throughout the selection process and claiming that the tender was not conducted according to international standards.

Officials here expressed concerns over the possibility that ROK would go as far as severing diplomatic ties with Israel.

"We hope not to reach that stage. We understand them and it is only natural for them to be upset," The Jerusalem Post quoted a defense official as saying.

The M-346 is due to replace the IAF's aging fleet of A-4 Skyhawks, a Vietnam-era fighter jet for bombing missions which first saw action in the 1973 Mideast war. Since the early 1980s, the IAF has used the aircraft to train cadets during advanced pilot training.

Israeli Defense Minister Ehud Barak welcomed the deal's approval, saying it would "provide the IAF with the tools to continue training the world's best fighter pilots while injecting hundreds of millions of dollars to local defense contractors."

In a statement, the army's Chief of Staff, Lt. Gen. Benny Gantz, said the deal would "make it possible to train the IAF's future pilots in the face of regional threats and challenges.