France's withdrawal of its Australian ambassador over Canberra's move to scupper a submarine deal with the European power has been "noted with regret".
Australia this week scrapped a $90 billion deal with France's Naval Group to build a fleet of conventional submarines, in favour of a nuclear fleet option as part of an alliance - named AUKUS - with the United Kingdom and United States.
France labelled the move a stab in the back and confirmed overnight it would withdraw chief diplomatic representatives from Australia and the US.
"We note with regret France's decision to recall its ambassador to Australia for consultations following the decision on the Attack class project," a spokesperson for Foreign Affairs Minister Marise Payne said in a statement on Saturday.
"Australia understands France's deep disappointment with our decision, which was taken in accordance with our clear and communicated national security interests.
"Australia values its relationship with France, which is an important partner and a vital contributor to stability, particularly in the Indo-Pacific. This will not change."
Senator Payne's spokesperson said Australia and France share many issues of interest and "we look forward to engaging with France again".
Senior federal Labor MP Mark Dreyfus called on Prime Minister Scott Morrison to explain how he plans to patch relations with Paris.
"The impact on our relationship with France is a concern, particularly as a country with important interests in our region," Mr Dreyfus said.
"The French were blindsided by this decision and Mr Morrison should have done much more to protect the relationship."
The AUKUS arrangement could see Australia's first nuclear-powered submarines in the water before 2040.
Mr Morrison confirmed Australia spent $2.4 billion on the scrapped French submarine deal for 12 Attack-class submarines.
"Of course they're disappointed," he said when the new deal was announced.
He stressed the decision did not reflect on the Attack class, Naval Group or the French government.
France's Foreign Minister Jean-Yves Le Drian said in a statement the decision by President Emmanuel Macron to withdraw the ambassadors was based on the seriousness of the matter.
"The abandonment of the submarine project ... and the announcement of a new partnership with the United States aiming at launching new studies for future possible nuclear propulsion co-operation is unacceptable behaviour between allies," he said.
"The consequences touch the very concept that we have of alliances, our partnerships and the importance of the Indo-Pacific for Europe."
With reporting from Reuters.
Australian Associated Press