ROME (Reuters) - NHIndustries has signed a contract worth more than 600 million euros ($648.18 million) with the NATO helicopter management agency (NAHEMA) to develop an upgrade of the NH90 military helicopter, the France-based group said.

The company - a joint-venture between France's Airbus, Italy's Leonardo and Dutch Fokker Aerostructures - will work on the new Software Release 3 configuration update, for the medium-sized, twin-engine helicopter.

The programme is Europe's largest military helicopter project, with more than 500 helicopters delivered.

"This contract marks a significant step forward in our ongoing efforts to provide our armed forces with the most advanced and reliable equipment," NAHEMA General Manager Michael Kohlhaas said in a statement on Thursday.

The upgrade plan aims to extend the in-service life of the NH90 fleet and will involve both naval and terrestrial variants used in four different countries - Belgium, Germany, Italy and the Netherlands - the statement said.

Leonardo's share of the project will account for some 50% of the contract's total value, a source close to the deal told Reuters.

"The rotorcraft sector is one of the most dynamic in the current aerospace and defence scenario. Leonardo has a leading position and aims at further reinforcing this role," Leonardo Helicopters Managing Director Gian Piero Cutillo said in an emailed statement.

Under its latest five-year strategy, the state-controlled company is looking to increase revenues for its helicopter business by 5.6% over the period and boost European alliances.

Cutillo said Leonardo would present the new AW249 combat helicopter at next week's Eurosatory arms and defence trade fair, close to Paris.

"It features a strong 80% European technology contribution, making it the best candidate for emerging European needs and collaborations," he said.

($1 = 0.9257 euros)