By David Schepp BBC News Online's North America business reporter

It was the battle of the titans within the defence-contractor industry.

Up for grabs was a 10-year contract worth nearly $300bn to build the world's only superpower its new Joint Strike Fighter super aircraft, capable of hovering like a helicopter and flying at supersonic speeds like a jet.

Lockheed's JSF is tipped by many to win

In choosing Lockheed Martin, the US Defense Department assured the nation's largest defence contractor that it has a future in an economy where it was previously vulnerable to cutbacks in military spending.

Over the 30-year production period, the final contract would create about 23,600 jobs, generating gross annual revenues of $1.7bn, according to Lockheed estimates.

Double good news day

The decision by the government to go with Lockheed Martin was a double-dose of good news for the Bethesda, Maryland-based firm, which earlier on Friday posted a rise in profits, pushing its stock higher by more than 2% in New York Stock Exchange trading.

For five years, Boeing and Lockheed have developed their planes to win a contract that will have military, business and economic consequences for decades to come.

Analysts predict more than 2,000 export orders on top of those from the US and Britain, which with after-sales support over several decades could take spending to $1 trillion.

Even though it lost its bid, Boeing, is also much more able of absorbing the loss of such a contract, given its commercial aircraft and space businesses.

Winner takes all

Prior to making its decision known, speculation swarmed that the US Government may choose both defence contractors, funnelling as much as 25-30% of the work to the runner-up.

But the government decided to throw its full support behind Lockheed Martin, which means it will likely see a steady stream of work for the next 11 years.

Lockheed Martin has estimated that the project would create 8,200 jobs and revenue of $690m during the eight-year development phase.

The huge development cost means Lockheed would likely be the last to make manned combat jet, as such planes in the future could be piloted by remote control.

Boon for Britain

As the US Government's staunch ally, Britain is the only nation to be granted "full-partner" status in the contract and has committed $2bn in development funds.

The decision is also a boon for Britain's BAE Systems, Rolls-Royce and others. BAE has about 15% stake in the Lockheed programme.

The US Government plans to build up to 3,000 Joint Strike Fighters (JSFs) over the next 40 years to replace nearly all fighter jets currently in use: the F-16, the A-10 attack jet, the AV-8 Harriers and eventually the F-18.

Delivery is scheduled to begin in 2009 but speculation calls for the jets to be delivered sooner now that the US and Britain are engaged in a conflict against terrorism.

Revolutionary design

The government's plan calls for three versions of the JSF, a more traditional aircraft for use by the Air Force, as well as two more for use on carrier jets

As designed, the JSF is capable of taking off quickly and landing vertically and has radar stealth capabilities.

Lockheed's X-35 is a lean design that looks more similar to conventional aircraft than the X-32 prototypes put forward by Boeing.

The version for the US Marines, the Royal Air Force and British Navy will be able to land vertically like the Harrier jumpjet, while US Air Force and Navy versions would land conventionally.