French President Emmanuel Macron said on Thursday that an offer to cooperate with Australia on submarines still stood, after a bitter row over a canceled contract last year threatened to ruin relations.

Macron was left furious when Australia's former Prime Minister Scott Morrison tore up a contract for France to build a dozen diesel-powered submarines and announced a deal to buy US or British nuclear-powered subs.

The row complicated relations and threatened to cancel an EU-Australia trade agreement before Prime Minister Anthony Albanese took power in Canberra.

The delivery of the new nuclear submarines could take years, potentially leaving Australia short of capacity.

Speaking in Bangkok, a day after meeting Albanese on the sidelines of a G20 summit in Indonesia, Macron indicated that the French offer "remains on the table."

Macron pointed out that France would not supply nuclear submarines to foreign countries, so the offer only stands for conventional vessels.

He added that it would guarantee Canberra's "freedom and sovereignty," noting that the vessels' construction would be in Australia.

"We will now see how they adapt to the difficulties (they face)," Macron said.

"There is a fundamental choice, which is to know whether they produce submarines in their own country or rely on another -- whether they go for nuclear or not."

"In this highly contested region, which is the theatre of a confrontation between the two major world powers, our strategy is to defend freedom and sovereignty," Macron said on Thursday.

During a visit to Paris in July, Albanese hailed a new start in ties, stressing that he would act with "trust, respect and honesty" in his dealings with Macron.

That meeting came after Australia signed a massive compensation deal with French submarine builder Naval Group to end the contract.

The settlement of 555 million euros ($584 million) resolved the spat and was hailed by Albanese as "fair and equitable." The original contract was worth an estimated 33 billion euros at the time.

The submarine row came as part of a new security pact between Australia, Britain and the United States dubbed AUKUS.

France considers itself to be a Pacific power due to its overseas territories including New Caledonia and French Polynesia. 

The French President is attending an Asia-Pacific Economic Cooperation (APEC) forum summit in Bangkok, and on Friday, he will give a speech as he seeks to relaunch his Indo-Pacific policy after the AUKUS humiliation.