Key Points:

Cabinet has agreed to start contract negotiations for new Air Force helicopters with manufacturer Agusta-Westland.

Defence Minister Phil Goff said the firm was the preferred tenderer for five A109LUH training-light utility helicopters and a flight simulator.

The cost of the helicopters and flight simulator will be announced when contract negotiations have been concluded.

"The negotiations will commence shortly and I expect a contract to be signed in the first quarter of next year," Mr Goff said yesterday.

"The helicopters should enter service with the Royal New Zealand Air Force in 2010."

Mr Goff said the purchase represented a new capability for the Defence Force and a quantum leap forward from the old Sioux training helicopter.

"In common with the Seasprite helicopter already in service and the eight new NH-90s on order for the RNZAF, the A109 is wheeled and capable of deployment from our Navy vessels," he said.

Mr Goff said the A109 flew faster, further and carried more people.

National's defence spokesman, Wayne Mapp, said he was concerned the helicopters had been chosen before a price had been fully determined.

"Surely, the Government is in danger of running into exactly the same problems it experienced with the NH-90 contract where the price blew out to nearly $1 billion from the original $500 million," he said.

Agusta-Westland is based near Milan and is one of the largest helicopter manufacturers in the world.