Australia on Sunday defended its move to cancel the $40 billion deal for French submarines on Sunday, saying the government had raised concerns with Paris for months.

"I don't regret the decision to put Australia's national interest first," said Prime Minister Scott Morrison.

Australia dumped the 2016 deal with France's Naval Group to build a fleet of conventional submarines and has instead opted for building at least eight nuclear-powered submarines with US and British technology as part of the new AUKUS security alliance between the three English speaking countries.

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An angry France retaliated by withdrawing its ambassadors from Canberra and Washington. 

"This is an issue that had been raised by me directly some months ago and we continued to talk those issues through, including with defence ministers and others," Morrison said at a press conference.

Morrison said he had informed France about the new deal at 8.30 p.m on Wednesday, while it had been formally announced at 7 a.m. Canberra time on Thursday. Defence Minister Peter Dutton said Australia was "upfront, open and honest" with France about its concerns.

"Suggestions that the concerns hadn't been flagged by the Australian government, just defy, frankly, what's on the public record and certainly what they've said publicly over a long period of time," Dutton told Sky News.

Paris has called the cancellation a stab in the back, with Foreign Minister Jean-Yves Le Drian saying relations with the United States and Australia were in a crisis.