CDC Systems UK Limited was one of three bidders seeking to secure the Bowman contract from the government.

Oakdale Business Park: Jobs target

CDC plans to construct the new radios at a purpose-built factory at Oakdale, near Caerphilly.

Assembly First Minister Rhodri Morgan said the news was a tremendous lift for the region.

"This area of Wales has been hit very hard over recent months by job losses announced by Corus at Ebbw Vale and Newport and Selectron and Aiwa in the mid-valleys area.

"We will now be stepping up our detailed discussions with the company to assist them with their requirements in Wales."

The army's existing radios are more than 20 years old and are said to be unreliable and insecure.

The MoD began considering replacements two decades ago, but it has taken a radical review of army procurement to ensure the situation has been speeded up.

Rhodri Morgan: 'Great boost for region'

The replacement will use the latest digital technology and will provide a significant economic boost for south Wales.

Highly-skilled jobs

CDC have earmarked a site on the Oakdale Business Park.

The new jobs would help replace 500 set to go at Solectron a few miles away at Cwmcarn.

It will become the headquarters for the Bowman project and many of the jobs created will be highly skilled.

Rival bidder Racal Electronics is likely to cut more than 400 existing jobs in Berkshire.

Sources close to the deal, however, are still confident of a victory for CDC.