Xenophon tells Japan build subs in Aust

Japan, one of three contenders for new submarines, needs to put up a credible proposal to build in Australia, says Nick Xenophon.

Nick Xenophon has warned Japan they need to put up a credible bid to build submarines in Australia. (AAP)

Independent senator Nick Xenophon has warned Japan they need to put up a credible bid to build new submarines in Australia not just in Japan.

Senator Xenophon, who's been visiting Japan, said he had explained directly to his hosts that if they win the deal to build the new subs, they ought to be built in Australia.

"I have made it clear politely, but I guess bluntly, that unless the subs are built in Australia, South Australia in particular, the Japanese will find themselves embroiled in a huge domestic political issue and I don't think that is in anyone's interests," he told ABC television.