The money would cover about two years' research but that could be extended to five years, the Asahi Shimbun reported citing Japanese government sources.

Last week, a Japanese Foreign Ministry spokesman said the two countries were close to signing a pact after broad agreement on the joint defence system was reached last year following North Korea's test-launch of a long-range missile over Japanese airspace.

The move comes as concerns mount that Pyongyang, which said last August's launch was a satellite, is believed poised to test fire a new, longer-range rocket which is believed capable of reaching parts of the United States.

Japan has allocated 960 million yen ($8.28 million) for its part of the joint research in the budget for the fiscal year to next March 31, and the Defence Agency has estimated that the research will cost around 20-30 billion yen over five to six years.

Meanwhile, Japanese Defence Minister Hosei Norota said he saw no indication a North Korean missile launch was imminent, the Mainichi Shimbun and other national dailies reported on Sunday.

Norota told reporters in northern Japan it would take North Korea about two to three weeks to gather the personnel and materials needed for a test launch.

The Mainichi cited a report from Russia quoting an unidentified North Korean diplomat as saying Pyongyang had no plans to test-launch a ballistic missile.