SYDNEY - Australia has cancelled a multi-billion dollar military satellite project with Lockheed Martin, with a Department of Defence statement on Monday saying the military will instead shift its focus to a multi-orbit system.

Lockheed Martin Australia was announced as the preferred tenderer last year for the Geostationary Earth Orbit (GEO) satellite communications system, in a project that was to deliver Australia’s first sovereign-controlled satellite communication system over the Indo-Pacific ocean regions.

The project for a single orbit satellite with Lockheed Martin had been cancelled, Defence said in its statement.

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"With the acceleration in space technologies and evolving threats in space since the project’s commencement, Defence has assessed that a single orbit GEO-based satellite communications system would not meet strategic priorities," the statement said.

It said Australia would instead prioritize a multi-orbit capability to increase resilience for the Australian Defence Force.

In a radio interview with the Australian Broadcasting Corporation, Prime Minister Anthony Albanese said while Australia's defense budget was increasing, his government was prioritizing its purchases.

When the Lockheed Martin project was announced last year it was said by authorities to be a "multi-billion dollar" deal, but in Monday's Defence statement there was no specific value to the cancelled project.

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However, Defence said in the statement that it will still allocate AU$9-12 billion ($13.87 billion) for space capabilities.