Israeli Defense Minister Ehud Barak and his German counterpart will sign a deal on Wednesday to finalize the sale of a sixth German-made advanced submarine, local Israeli media reported on Monday.

The diesel electric powered sub is the longest to have been made by Germany since World War II, that will enhance Israel's naval capacity, the Ha'aretz newspaper said.

The German parliament approved the agreement a few months ago after three years of negotiations. The parliament approved the deal only after Israel released the Palestinian tax money which it froze after UNESCO admitted the Palestinians as a member state.

Israel's submarine fleet, which numbers three German-made Dolphin vessels, is the navy's long-range strategic arm. The German government financed most of the costs of the first three submarines.

Israel is expected to take command of two more such vessels by the end of 2013 and 2014.

The sale of the subs, which are partly underwritten by the German government, almost ended last year over sharp criticism by German Chancellor Andrea Merkel over Israel's construction policies in disputed areas of Jerusalem.

Both subs are equipped with state-of-the art systems and can launch missiles with nuclear warheads.

While Israel maintains an official policy known as "nuclear ambiguity," according to which the Jewish state will not be the first or last nation to introduce nuclear weapons in the Middle East, its submarines are designated as a deterrence weapon that affords a second strike capability.