The two companies said they had signed a "heads-of-agreement" deal which will see the yard change hands for �2.25m.

Kvaerner spokesman Mike Emberley explains the terms of the deal

A full detailed agreement is expected to be concluded before the end of September.

Kvaerner said: "The signing ... means that the immediate threat of large-scale redundancies at the yard can now be lifted."

All current operating assets and liabilities will remain part of Kvaerner's account, as will responsibility for the completion of the two vessels now being built there.

Workers are jubilant at the deal

Marconi has agreed to transfer work to the Glasgow yard, providing employment for many of the 1,200 staff up to the point of completion by the end of September.

Kvaerner will foot the bill if there are any redundancies at the yard in the 42 months after that date.

But the Norwegian firm's President, Kjell Almskog, said: "Marconi have assured us that their aim is to secure a long-term future for the yard."

Dr John Reid: "Time for politicians to pull out"

Asked if public money had been used to help clinch the deal, Scottish Secretary Dr John Reid said: "We have always made it plain that if someone wanted to take over the ayrd we would be prepared to give financial assistance in return for their investment.

"That's something that's already on the record. We have to make sure the workforce and the management are able to compete in a very competitive world."

'Electric atmosphere'

The yard's GMB union convener Jamie Webster said: "It's absolutely fantastic. The atmosphere here is electric, people are over the moon.

"Now the party can start officially and I'm going to one right now.

Jamie Webster: "Time for party"

"The next stage is to get back to work, get some orders and prove to Marconi that we are the best in the business."

Mr Almskog described the deal as a "balanced" solution and he said it reflected the interests of the workers, shareholders and the Govan community.

He said: "Uncertainty has surrounded the future of the Govan yard ever since we made a strategic decision earlier this year to make a complete exit from our global shipbuilding activities.

"The past few weeks have been extremely difficult for our workforce.

"We still have some way yet to go to make this deal really work - but all the parties are now determined to make that a reality."

The outline settlement was the sequel to a "handshake" general agreement reached late on Tuesday.

'New future'

The two companies were brought together at the behest of Scottish Secretary Dr John Reid and Scottish Office Industry Minister Lord McDonald.

Dr Reid said: "A new future beckons for the Govan yard but the months ahead will not be easy."