RAF aircraft support work is already being transferred from the base

Ministers hope to make a decision on the agency by the middle of 2005.

More than half its staff work at St Athan in south Wales and Sealand in north Wales. There are also bases at Gosport, Hampshire, and the Scottish city of Perth.

Vale of Glamorgan MP John Smith believed privatisation was likely and that St Athan would find a buyer.

Dara, which is a civilian arm of the Ministry of Defence, was set up to cut the costs of maintaining and repairing the UK's military aircraft.

Almost 1,600 staff work at Dara's St Athan headquarters. It is alongside the RAF base, which is itself close to Cardiff International Airport. A further 670 staff work at Sealand, Flintshire.

If they are looking for private sector buyers then it will be a bargain John Smith MP

Plans to cut 500 jobs at St Athan were announced in September, with much of the work on Tornado and Harrier aircraft transferred back to the RAF.

Defence Minister Adam Ingram wrote to MPs last week that "work on the DARA review to date had indicated that there is no longer a strategic need to retain the organisation with MOD."

"The alternative to retaining DARA within MOD would be to place parts or all of it in the private sector."

The MOD said it needed to explore the level of interest there might be from industry in acquiring individual parts of the agency.

A decision is expected by the middle of next year.

DARA said on Tuesday that it had no comment on the review of its future.

But Mr Smith said as he understood it the MOD had already decided to sell off the agency, with the transfer of work back to the RAF making DARA no longer commercially viable.

World-beating

But he said St Athan would attract a number of prospective buyers.

"St Athan has a world-beating workforce in military aviation," he said.

"We have a �80m state-of-the-art hangar. I am confident that if that is going to be marketed then we will get some serious interest.

"If the MOD are foolish enough to ignore St Athan's skills, I am confident there are people out there who will snap it up."

Project Red Dragon, a joint MOD project with the Welsh Development Agency, which aims to develop a world-class aviation centre is also based at the St Athan Dara base.

Alyn and Deeside MP Mark Tami has pledged to fight "tooth and nail" to secure the future of Dara on Deeside.

Mr Tami has said he has been assured there are no preferred options for the site at the moment but has said he will not rest until the future of DARA is assured.