Alvis Vickers has scored success with its Scorpion armoured vehicle

The company fought off European competition for the Ministry of Defence contract.

Manufacture and testing of the vehicles will be done at the company's plants in Newcastle and Telford.

John McKeown, business development manager of the Newcastle plant, which employs 450 people, told BBC News Online: "Any big contract will clearly help all our sites, particularly our main ones on Tyneside and in Telford.

"This is a major contract which will bring a lot of benefits."

The company will develop 500 of the mobile light armoured vehicles (MLVs), which weigh seven tonnes and incorporate the latest automotive technology.

Managing director Trevor Harrison said they were delighted.

He said: "The programme will benefit the entire business both in Newcastle and Telford and in turn these benefit local and regional suppliers and sub contractors.

Prototype MLVs were tested by the Army in 2002.

The chassis for the vehicles will come from Italy, but 70% of the contract will be UK-based.

Midlands-based Alvis took control of the Rolls-Royce owned Vickers in Newcastle in October 2002 in a �16m deal.

The deal made the new Alvis Vickers company the country's biggest manufacturer of armoured cars.

There had been faltering export orders for Vickers' flagship product, the Challenger II tank.