BAE Systems runs the two Clyde yards

The contract is the biggest single UK warship order placed by the Ministry of Defence in decades.

The MoD had agreed a �1bn deal with BAE for the first three ships in December 2000.

Then, in July last year, the government committed itself to buying a further three destroyers from the company.

Speaking during his visit to the Clyde yards, Lord Bach said: "Today's announcement is the clearest indication of the government's commitment to a modern and powerful Royal Navy.

"A total of 22 warships, auxiliaries and submarines are now on order or under construction for use by the MoD."

We can look to the future with hope

George Foulkes Minister of State for Scotland

The 7,350 tonne ships will be the most advanced air defence ships in the world when they enter service from 2007.

BAE Systems will spread their construction through its yards in the UK, including the two on the Clyde and its other yard at Barrow-in-Furness.

The price of the vessels will rise to �4.3bn by the time they are completed and fully equipped.

It is expected that the deal will sustain some 1,200 jobs on the Clyde, 900 at Barrow-in-Furness and about 800 at Vosper Thornycroft on the south coast of England.

Minister of State for Scotland George Foulkes said the contract was "a major boost" for Clydeside and Scottish shipbuilding.

Scotstoun and Govan are proving that they can compete with the best

Wendy Alexander Enterprise Minister

"The work of the Clyde shipyards task force was based on the Clyde yards securing a significant share of the Type 45 programme," he said.

"That has now been delivered and we can look to the future with hope."

Scottish Enterprise Minister Wendy Alexander added: "The awarding of this contract is excellent news for the Govan and Scotstoun shipyards, their workforce, and for the Clyde.

"The work will sustain up to 1,200 jobs on the Clyde, as well as the company's significant supply base in the local community.

"Scotstoun and Govan are proving that they can compete with the best and today's announcement is another important step to securing a shipbuilding industry on the Clyde for years to come."

Redundancies announced

The signing of the contract comes only weeks after a government taskforce predicted a brighter future for the shipyards.

A report by the taskforce, set up and chaired by Ms Alexander, said that concentrating on warship production was one of the keys to securing the future of the BAE yards.

The taskforce was set up after BAE Systems announced last summer that 1,000 workers would be made redundant at the two yards.

However, more than 400 of those workers will now be retrained for work in new industries.