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UPDATE 1-Australia orders 58 F-35 Lockheed Martin stealth fighters

(Recasts with announcement, adds analyst quote)

SYDNEY/WASHINGTON, April 23 (Reuters) - Australia will order 58 more F-35 fighter jets built by Lockheed Martin Corp for A$12.4 billion ($11.61 billion), Prime Minister Tony Abbott said on Wednesday, a purchase that will raise its air combat power to among the world's most advanced.

Australia approved the purchase of 14 of the stealth fighters in 2009, and the additional jets will provide the Royal Australian Air Force with enough aircraft to form three operational squadrons and one training squadron.

The first F-35 aircraft will arrive in Australia in 2018 and enter service with the RAAF in 2020, Abbott said.

"The fifth-generation F-35 is the most advanced fighter in production anywhere in the world and will make a vital contribution to our national security," he told reporters in Canberra.

The Australian purchase is a signal of confidence in the F-35 Joint Strike Fighter (JSF) programme, which is about 70 percent over budget and years behind schedule.

The programme, the Pentagon's most expensive arms development project, has been plagued by technical issues and sceptics say it still faces big challenges, including completing the software needed to integrate weapons on the jet.

Its total cost is now seen at $1.42 trillion, including research, development, procurement and operations through 2065.

The Pentagon last week released a revised estimate for the cost of the 2,443 planes to be purchased by the U.S. military that showed a 1.9 percent increase.

Air Force Lieutenant Chris Bodgan, who runs the programme for the Pentagon, said the increase was largely due to budget-driven delays in orders by the Pentagon and other allies. Additional orders would help drive the cost down, he said.

Lockheed is building three models of the F-35 for the U.S. military and eight countries that helped fund its development: Britain, Canada, Australia, Norway, Italy, Turkey, the Netherlands and Denmark.

Israel and Japan have also placed orders, and South Korea has said it plans to buy the plane as well.

AUSTRALIA'S LAST MANNED FIGHTER

Despite concerns about the programme, Abbott said Australia was considering acquiring an additional squadron of the jets to replace its fleet of Boeing F/A-18E/F Super Hornet fighters.

Australia has moved recently to upgrade its air defence capabilities, announcing in February that it would buy eight of Boeing Co's P-8A Poseidon long-range spy planes for A$4 billion and committing in March to purchasing the U.S. Navy's MQ-4C Triton unmanned aircraft.

Abbott defended the latest purchase ahead of the release next month of what is expected to be a very tight federal budget due to a significant revenue shortfall.

"This is not new spending today, in the context of a tough budget, this is spending money that we need to spend that has been sensibly put aside in the past to ensure that our nation's defences remain strong," he said.

The fighter will allow for greater interoperability with the United States and other allies, as well as boosting communications between Australia's different branches of service, said James Brown, a military analyst with the Lowy Institute.

The purchase deepened his concerns, however, that Australia was falling behind the rest of the world when it comes to the development and deployment in combat of unmanned aircraft, or drones.

"I think we need to now seriously ask the question about whether this is the last manned fighter jet Australia will purchase," he told Reuters.

"My main concern in terms of where Air Force is going is that we're not thinking seriously enough about the next aircraft after JSF being unmanned."

($1 = 1.0677 Australian Dollars)

(Additional reporting by Sonali Paul in Melbourne; Editing by Stephen Coates)

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