Rheinmetall is cooperating with state-owned N7 Holding National Defence Industry Innovation Company on the project to develop the Panther KF51 through to production maturity.

N7 holds a 49pc stake in Rheinmetall's local joint venture Rheinmetall Hungary.

Rheinmetall CEO Armin Papperger said the contract, with a value of around EUR 288m, was "another important milestone on the path to producing next-generation fighting vehicles in Hungary".

"We'll be empowering…Rheinmetall Hungary and further strengthen the national defense industrial capabilities of our partners," he added.

A demonstrator vehicle will be constructed and qualified, paving the way to full-scale production, Rheinmetall said.

In a video message posted on Facebook, Defence Minister Kristóf Szalay-Bobrovniczky said the cooperation would come with "great advantages" for Hungary and allow it to take its place in an area of development that was the "privilege of really important, strong countries".

Some 70 Hungarian engineers will work on the project over several years, while the factory in Zalaegerszeg will provide the framework for the cooperation, he added.