A cabinet meeting under Prime Minister Shaukat Aziz approved the deal on Wednesday following negotiations with Saab and Ericsson, the joint manufacturers of the aircraft-mounted radar.
“The Federal Cabinet accorded the go-ahead to the Ministry of Defence Production of the proposed purchase of AWACS aircraft from Sweden,” an official statement issued after the cabinet meeting said.
The statement did not say how many aircraft Pakistan would buy.
The AWACS purchase is seen as a bid to match a deal by rival India in 2004 to buy three Phalcon airborne early warning radar systems from Israel and Russia worth 1.1 billion dollars.
The Pakistan Air Force desperately needs the system to make up for the existing gap in air surveillance capability, a military official said.
Pakistan currently relies on a ground-based radar system.
Negotiations were initiated with Saab and Ericsson in October 2005 and much of the preparatory work has already been done, the official said.
The deal shows that Pakistan has been able to offset the heavy losses caused by last year’s South Asian earthquake, which had forced it to temporarily postpone the long-awaited purchase of around 25 US-built F-16 fighters.
Pakistan agreed in April to purchase a scaled-down package of F-16s.