Thales said it agreed the partnership with Steyr after extensive testing of the Austrian manufacturer's lightweight launcher -- about 2 1/2 pounds -- on the EF88 and its variants.
The side-opening grenade launcher with a double action trigger, lever operated safety catch and 180mm barrel, can be fitted in seconds by soldiers in the field without any specialist tools, Thales said.
Thales is developing the EF88 rifle as part of Australia's LAND 125 program to upgrade field equipment for soldiers.
Thales also is developing the EF88 in an export variant, the F90, which will incorporate Steyr's SL40 launcher.
The standard weapon since the late 1980s for ground troops of Australia and New Zealand is the F88 Austeyr assault rifle, which Thales manufactures in Australia under license from Steyr Mannlicher.
The EF88 is based on the F88 AUG -- Armee Universal Gewehr -- a 1970s-era bullpup 5.56mm assault rifle.
For more than 30 years Austria's army has used the F88 AUG. It is also standard issue for some Austrian state police forces.
Firearms manufacturer Steyr Mannlicher, based in Steyr, Austria, was part of Steyr-Daimler-Puch until 1990 when the group was broken up and Steyr became independent.
Thales announced in September that it is working with Singapore Technologies Kinetics to develop ST Kinetics' 40mm low-velocity air-bursting ammunition for use in the F88 and the EF88.
Under the agreement, Thales' subsidiary Australian Munitions will manufacture the extended-range ammunition at its factory in Benalla, Victoria state.
Thales Australia reorganized its armaments manufacturing businesses and created Australian Munitions in September 2012. The restructuring was part of a strategy to capture more of the munitions and general defense manufacturing market.
Australian Munitions encompasses Thales' Victoria state Benalla factory, an explosives and propellants facility at the government's Mulwala site in New South Wales state and other logistics services in Australia.
The Steyr grenade launcher announcement comes as Thales Australia said it is seeking expressions of interest for the provision of other small arms accessories for the EF88 weapon system.
"Thales will commence small arms accessories product analysis and testing in early 2014 under its current Land 125 Ph3C contract," the announcement said.
Thales will conduct a request for tender process on behalf of the Department of Defense the surveillance and target acquisition products that will fit onto the EF88 by way of the STANAG 4694 rail system.