Defence Minister Ng Eng Hen told parliament of the decision to acquire the MRTT, which is based on the civilian A330 plane.
Mr Ng did not say how many Singapore will buy, but an industry source said in January the city-state wants to buy six MRTT aircraft in a contract worth an estimated 1 billion euros (45.5 billion baht).
The Singapore air force operates a squadron of KC-135R air refuelling tankers, according to The Military Balance 2014, published by the London-based International Institute for Strategic Studies.
By 2030, ''our current KC-135 aerial tankers will have been replaced by the Airbus A330 Multi-Role Tanker Transport, which we have decided to acquire,'' Ng said during a debate on the country's budget.
''The MRTT, or Airbus A330, can hold 20% more fuel than our current KC-135s and will extend the range of our fighters through air-to-air refuelling,'' he said.
''The Airbus A330 can also double up as a cargo and troop-lift aircraft to deploy troops and equipment to overseas sites further away as we have done in HADR (humanitarian and disaster relief) operations.''
IHS Jane's Defence Weekly says Airbus has won orders for the MRTT from the air forces of Australia, Saudi Arabia, Britain and the United Arab Emirates.
Boeing's KC-135, which began flying for the US Air Force in the 1950s, provides mid-air refuelling services for long-range bombers, fighters and cargo aircraft.
Boeing in 2011 beat its European rival for an estimated $30 billion contract to replace the US Air Force's ageing fleet of KC-135 tankers with the newer KC-46 aircraft, with the first deliveries expected in 2017.