Earlier this year, the Federal Government announced in its defence white paper it wanted to build as many as 12 subs as part of a large military build-up.

An Australian Strategic Policy Institute report released today says, ''If ... the cost of the program follows historical trends, the fleet could cost as much as $36 billion.''

Report authors Sean Costello and Andrew Davies have argued the high-tech capabilities the Government would like in the subs might need to be discarded.

They have gone so far as to suggest the Government should have a plan B involving the design and construction of ''a smaller but still lethal submarine based on an existing design''. The Government's capability demands run from the subs operating ''anti-ship and anti-submarine warfare'' through to mine detection and ''short-notice contingencies''.

''The Government must not remain ignorant about what can be achieved with off-the-shelf hardware,'' the report says.

''Presently available, in-service foreign submarines and their planned descendants are steadily growing in capability. They may yet prove a credible option once crew size, logistic support [including forward basing], potentially greater numbers at sea and other factors, not least of which are project risk and cost, are considered.

''If an existing submarine design can defend the nation and support national strategy at a lower cost to the taxpayer, the Government must consider it.''

The warning comes after the disastrous Collins class submarines fiasco.

Once labelled ''dud subs'' after a series of problems, the Collins had undergone a protracted remediation program over the past decade which seemed to have overcome all defects.

However, the chief of the Defence Materiel Organisation, Stephen Gumley, said the Collins submarines had now gone to the top of the list of troublesome projects, a position once occupied by the now cancelled Seasprite helicopter project.

AAP