OTTAWA—The federal Conservative government has formally pushed “reset” on its search for a new fighter jet after revealing that the Lockheed Martin F-35s they had picked would cost more than $600 million apiece to own and operate over their lifespan.

Battered by opposition criticism, sticker shock and with the sharp critique of the auditor general ringing in their ears, Conservative cabinet ministers confirmed Wednesday that they were starting fresh in their search for a jet to replace aging CF-18 Hornets.

“We have hit the reset button and are taking the time to do a complete assessment of all available aircraft,” Public Works Minister Rona Ambrose told reporters.

The F-35 Lightning II — the choice more than two years ago — is in the running but its purchase is far from certain, especially given the rising costs for the stealth fighter.

While the government has vowed to spend no more than $9 billion to buy the jets, a cost analysis reveals that Ottawa has set aside just $602 million in reserve funds to cover unexpected price hikes. That’s far short of the recommended contingency fund of $2.5 billion, the analysis by the accounting firm KPMG says.

Any increases in cost would force Ottawa to cut its jet order to stay within budget, leaving the Department of National Defence (DND) short of fighters.

“DND has advised that their risk mitigation strategy ... is to reduce the number of aircraft acquired,” the analysis states. “This could reduce the initial fleet to as low as 55 aircraft, which is below DND’s current stated requirements.”

On Wednesday, officials released an audit report showing that the “cradle-to-grave” costs of owning and operating a fleet of 65 F-35s would total $44.8 billion, a stunning price tag and far higher than any cost released so far.

Defence Minister Peter MacKay sought to put the eye-popping number in context, noting that it includes the cost of salaries and fuel, which in the past have not been lumped in with the price tag of new military gear.

MacKay said the government is trying to ensure a “balance between military needs and taxpayer interests.”

Still, Ambrose cautioned that whatever jet is picked, it won’t be cheap. “It’s clear that any aircraft the government chooses will come with a significant price tag,” she said.

But even as they unveiled the new costing, federal officials also formally launched a new process to buy fighter jets, a dramatic U-turn from their July 2010 announcement that the F-35 was the best and only option.

In fact it was Ambrose and MacKay who appeared together at an elaborately staged news conference in Ottawa that featured a full-sized mock-up of an F-35 alongside a CF-18 flown in for the event. At the time, MacKay declared the F-35 was the only fighter that fit the air force’s needs.

On Wednesday, the two ministers were noticeably more subdued as they appeared before reporters to confirm they were starting over, a seeming indictment of their initial choice of the F-35.

Ambrose said the new search will be marked by “due diligence, oversight and transparency.”

In a bid to quell criticism, officials will take a page from their successful process in 2011 to issue $33 billion in shipbuilding contracts — a decision that stirred little criticism or controversy.

That process will involve consulting with the potential bidders, a independent third-party review and a high-level steering group within government.

As well, recognizing the new search could delay the acquisition of new fighters, officials also announced they were doing analysis to update the life expectancy of the CF-18 fleet, bought starting in 1982, and determine what needs to be done to keep the jets safely in the air.

The day was a dramatic climb-down for the Conservatives who had ridiculed critics that expressed concerns about the choice and cost of the F-35, including opposition MPs and the parliamentary budget officer.

Asked whether he regretted his previous sharp language at critics, MacKay was unrepentant, saying he was simply being “passionate” about getting the military the equipment it needs.

But opposition MPs said the government has yet to commit to an open competition for the CF-18 replacement fighter.

“What we heard today is that the minimum price for this plane is three times higher than anything that this government has publicly disclosed to date. That’s tens of billions of dollars higher,” said NDP MP Matthew Kellway.