The disputed Falkland Islands have a new constitution, the British and Falkland Islands' government has said.

The new document, approved by Queen Elizabeth II on Wednesday, formalises the system of self-government on the South Atlantic archipelago while giving London the final say on matters of foreign policy, policing and the administration of justice, according to a joint statement.

"It enhances local democracy, while retaining sufficient powers for the UK government to protect UK interests and to ensure the overall good governance of the territory," Foreign Office minister Gillian Merron said in the statement on Thursday.

The British government's role in administering the overseas territory is highly sensitive. The islands, known in Spanish as Las Malvinas, are claimed by Argentina, which fought Britain in a 73-day war over the archipelago in 1982.

The conflict, which followed Argentina's invasion of the islands, cost the lives of 255 British servicemen, many of them lost at sea, and more than 600 Argentines. Although the countries restored diplomatic ties in 1990, relations remain fraught. Argentina's government still insists the islands will eventually be returned by peaceful means.

The island, which counts about 3,000 residents, elects eight councillors to a legislative assembly every four years. Three of them serve on the islands' Executive Council.

The joint statement said the new constitution clarified the relationship between the Executive Council and the governor, who is appointed by the British government in London.