A Liberal government would cancel the $16 billion contract to purchase new stealth fighter jets and open the process to replace Canada's aging CF-18s to multiple bids, Michael Ignatieff announced Wednesday.

Ignatieff had been non-committal about what his party would do to replace the aging planes despite repeatedly hammering the Conservative government's multibillion-dollar deal.

But he said the auditor general's report Tuesday that found delays and cost overruns connected to the purchase of military helicopters served as a wake-up call for his party and for all Canadians.

"This is a story of waste, cost-overruns, failure of ministerial responsibility and accountability. What was Peter MacKay doing in these years when these costs skyrocketed and no control was exerted over the process?" Ignatieff said to reporters Wednesday after a caucus meeting.

"We've decided . . . that we would cancel the accord reached by the Conservative government on the F-35s. We would reform the acquisition to take into account what the auditor general is saying about the waste of money and bad management."

Last summer, the federal government finalized a deal to purchase 65 F-35 Lightning II fighter jets from U.S. manufacturer Lockheed Martin. The estimated cost of the deal runs as high as $16 billion.

For weeks, the opposition has been hammering the Tories in the House of Commons, calling on the government to cancel the deal and accept bids from other contractors.

The government has repeatedly argued that the F-35s are the best jets for the armed forces.

In her report released Tuesday, Auditor General Sheila Fraser slammed the government over its recent purchase of CH-148 Cyclone helicopters for maritime patrol and the sole-sourced contract for CH-147F Chinook helicopters for battlefield transport. The purchase of both helicopters carries a combined price tag of $11 billion. Delivery of both is years behind, and Fraser warned that rising costs could force the military to make training or operational cuts a result.

Fraser said her findings include lessons for the purchase of the F-35 jets.

During question period in the House of Commons Wednesday, Ignatieff said the auditor general's report proves the government's procurement policy "is an incompetent mess."

"Will the prime minister listen to the auditor general, cancel the contract and open up a free, competitive and transparent bid to replace Canada's CF-18s?" Ignatieff asked.

Harper said his government will review and implement the auditor general's recommendations, but defended the government's procurement process.

"Let me tell you about responsibilities we've got here. We've got a responsibility to replace fighter aircraft and not play politics with the lives of our men and women in uniform," Harper said.

"We've got a responsibility when it's national aeronautics industry day here to make sure we protect the people, the men and women who work in that industry, against the irresponsible behaviour of this leader of the opposition."

NDP Leader Jack Layton also raised the possibility of operational support cuts as a result of cost overruns in the helicopter contracts.

Layton said the only way to fully implement the auditor general's recommendations would be to cancel the F-35 contract. "Or are they going to repeat the helicopter boondoggle?" Layton asked.

"The military has been absolutely clear about the need here," Harper said. "In fact, this is simply coalition politics playing games with military contracts against what the entire aerospace industry and the entire defence establishment of this country realizes is necessary. The government is going to proceed."

With files from The Canadian Press