France and Germany have announced a €65 million contract to design a next-generation stealth fighter jet.

The new design will combine manned jet fighters with a swarm of cloud-connected drones, Dassault said in a release.

It is the first act of a joint programme that will see the building of a combat aircraft and associated weapons, such as drones.

The project, plans for which were first announced in 2017, has been hailed by both countries as a cornerstone for European defence.

Ursula von der Leyen, Germany's defence minister, and her French counterpart, Florence Parly, inaugurated the project at a Safran's site in northeastern Paris.

The French company will produce the jet's new engine in collaboration with Germany's MTU Aero Engines.

Dassault Aviation and Airbus will build the system which is expected to be operational from 2040.

“This contract is the very first brick of a stupendous building,” Parly said in her speech.

She continued praising the project on Twitter, claiming it “made us stronger” and “paved the way for European defence".

After nearly two years of preparatory work by the companies involved, Wednesday’s agreements and contract signing will pave the way for the programme — named the Future Combat Air System (FCAS) — to begin in earnest.

FCAS is poised to expand to other European countries. Von der Leyen confirmed that Spain was due to join the project in the summer.

“We’re working on it. We have a plan within the coming weeks and months to have Spain join,” she said.

Britain, which is due to exit the European Union in March, unveiled its own rival aircraft development programme, dubbed Tempest, at the Farnborough Air Show in July.

But European military and industry executives say they believe the two programmes could and should eventually be merged given the need to compete internationally and the many billions of euros needed to develop a new combat aircraft.

A French army source said Paris and Berlin were open to more European partners joining the project.