New Zealand warship HMNZS Te Kaha is being kitted out with a multi-million dollar supersonic missile defence system.

The RNZN Anzac-class frigate has sailed to Canada where it will undergo a multi-million facelift at Seaspan's Esquimalt shipyard in British Columbia.

The warship will have upgrades undertaken by Lockheed Martin Canada to its surveillance, self-defence, and combat capabilities, including a new combat management system (CMS), radars, above water sensors, and hull-mounted sonar upgrade.

And its RIM7P Seasparrow missile will be replaced with MBDA's British-designed Sea Ceptor vertical launched Common Anti-air Modular Missile (CAAM(M)) missile system.

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The new missile can reach speeds three times the speed of sound and can attack multiple targets simultaneously, protecting an area of around 1300 square kilometres over land or sea.

The upgrade project, which involves HMNZS Te Kaha and a second frigate, HMNZS Te Mana, has ballooned in cost by $148 million to a total cost of $639 million.

To fund the cost overrun, Minister of Defence Ron Mark said Cabinet agreed to reallocate a portion of the money that was provisioned in Budget 2017 for the Littoral Operations Support Capability project.

"The Government's decision reflects the value placed on our frigates and their ability to operate across and support a wide range of operations," Mark said.

"In the time the frigates have been operational, New Zealanders have come to expect their involvement in constabulary and humanitarian, to combat roles as part of a multinational coalition. These contributions are valued by our international partners."

Mark said the upgrade is the latest in a series of projects that will extend the vessels' operational life to around 2030.

Earlier projects delivered a refit of the frigates' propulsion, heating and air-conditioning systems, and the close-in weapon system.

The UK's Royal Navy completed successful live-firing tests of its Sea Ceptor air defence system off the coast of Scotland last year.

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Last June, the NZ Army released its vision, Future Land Operating Concept 2035: Integrated Land Missions (FLOC 35) for a light fighting force.

It predicts that New Zealand's greatest risks will continue to be border control and illegal resource exploitation, including unlawful fishing, along with natural and human disasters. Terrorism in the Australia and South Pacific region will continue to be a "highly-localised, small-scale but high-profile threat".