Japan has decided to build a missile defence system using US technology, to shield itself from possible attack.
The missiles would be located on destroyers and on land
Japan said that the system would be purely defensive and it had no intent to harm other countries.
Japan's Defence Agency said the project would cost 700bn yen ($6.5bn) over five years, 500bn yen of which would be spent on deploying the missiles.
Support for the move has grown since North Korea test-fired a ballistic missile over Japan five years ago.
The decision to go ahead with a missile defence system was made by Japan's Security Council after a recommendation by the Defence Agency.
"It is a purely defensive system and should not threaten our neighbours," said Chief Cabinet Secretary Yasuo Fukuda.
BOOSTING JAPAN'S DEFENCE
Refit Japan's 4 high-tech Aegis destroyers with sea-based anti-missile rockets (Standard Missile-3 or SM-3 systems)
Buy ground-to-air anti missile rockets (Patriot Advanced Capability-3 or PAC-3 systems)
New systems will be deployed from 2007-2011
Estimated cost: $6.5bn
Source: Kyodo news agency
"We will do our utmost to defend our nation and to prevent the spread of weapons of mass destruction," he said.
The BBC's Jonathan Marcus says that despite those assurances, there are fears among some arms control experts that the development of defensive systems could spur other countries in the region - like North Korea and maybe even China - to bolster their offensive capabilities.
Japan's system will be deployed between 2007 and 2011.
The government has also proposed to complete an overall defence review by March 2005, which would look at adapting Japan's defence to a changing security environment.
That could include a review of Tokyo's ban on arms exports, which may be altered to allow Japan to co-operate on technical development with the United States of its proposed missile defence shield, also known as "son of star wars".
Japan has been increasingly alarmed by a number of missile launches by North Korea off its coasts, and by that country's nuclear weapons ambitions.
In 1998, a missile was actually fired over Japanese territory, an incident which prompted Tokyo to launch joint research with the United States on developing missile defence systems the following year.