Australia unveiled a substantial compensation deal with French submarine maker Naval Group yesterday, ending a contract dispute that soured relations between Canberra and Paris for almost a year.

Prime Minister Anthony Albanese said the French firm had agreed to a "fair and an equitable settlement" of 555 million euros (US$584 million) for Australia ending a decade-old multi-billion-dollar submarine contract.

The agreement drew a line under a spat that caused leader-level recriminations and threatened to torpedo talks on an EU-Australia trade agreement.