Under the decision made at the defense program committee, chaired by Defense Minister Song Young-moo, the Defense Acquisition Program Administration plans to pick a contractor for the initiative by the end of this year.

The scheme, code-named the "425 Project," is spearheaded by the national arms procurement agency and the state-run Agency for Defense Development.

It's aimed at establishing a military spy satellite system capable of collecting security-related information and intelligence on the Korean Peninsula and in nearby regions.

The Ministry of National Defense expects it to help Seoul's push for an early transfer of wartime operational control of its troops from Washington.

"The satellites, if developed, will be operated basically under the ministry's responsibility for military purposes including the surveillance of core targets such as North Korea's nuclear and missile programs," the ministry said.

It acknowledged budget and technological constraints in the ADD's own development of such high-profile satellites.

But the ministry will make the best use of local firms or research centers.

"We will cooperate with foreign companies for inadequate technologies," it added.

The military is also set to decide by October whether or how to lease foreign spy satellites before the 425 Project is completed, said the ministry. (Yonhap)