The Czech Cabinet has approved a $1.8bn deal to by fighter jets made by Sweden's Saab and Britain's BAE Systems, in one of the largest Eastern European defence deals since the collapse of the Soviet Union.

The deal, which still needs parliamentary approval, would equip the Czech air force with 24 new supersonic JAS 39 Gripen fighter jets, replacing the country's obsolete Soviet-made fleet of MIG-21s.

"From the second quarter of 2005 the current MIG-21s would be replaced by the Gripens to ensure our air defence," Stefan Fuele, Deputy Defence Minister, said.

If signed, the contract would give the Saab and BAE joint venture a significant boost in the second-rank fighter market for countries that cannot afford the Eurofighter Typhoon, Lockheed Martin's F-16, or Boeing's F/A-18 Super Hornet.

Britain Prime Minister Tony Blair was caught up in controversy for lobbying the Czech government to buy Gripen.

BAE Systems is a Labour Party donor.

Gripen soars

The order represents an important endorsement for the Gripen, which is also on a number of other countries' shortlist for new fighters.

Defence ministries evaluating bidders complex technical claims pay careful attention to the decisions of earlier buyers.

Boeing, Lockheed Martin, Dassault Aviation of France and Eurofighter all pulled out of the Czech tender amid allegations that it was biased in favour of the Gripen consortium

Saab and BAE, a 35% shareholder and joint venture partner for Gripen export sales, have already secured sales in South Africa and Hungary and are waiting decisions from Poland, Austria and Malaysia.

As a bid sweetener, BAE Systems offered to buy a stake in state-owned Aero Vodochody, the largest Czech aerospace company, to which it would probably subcontract some work.

Government approval

The minority Social Democrat government expects a dogfight in parliament with opponents who argue the deal is too costly.

The administrations has not confirmed if contracts will be exchanged before elections on 14-15 June, from which the minority government is unlikely to emerge in its current form.

The purchase would bring the Czech Republic closer to the standards of the North Atlantic Treaty Organisation (Nato), of which it has been a member since 1999.

But Nato is concerned the funding will eat into other military modernisation programmes and has said is "very important" for the Czechs to finance the purchase outside the existing defence budget.

If parliament rejects a bond issue to finance the jets, the government can use privatisation revenue to fund the deal.