A Devon dockyard has said it is extremely disappointed not to have won the contract to repair the destroyer HMS Nottingham.

The Royal Navy ship, which was damaged on rocks off Australia, has sailed into Portsmouth, where she will undergo �26m repairs.

Devonport Dockyard in Plymouth had hoped to win the contract, saying it would have helped keep hundreds of people employed at the yard.

The type-42 destroyer hit rocks and holed her hull in July and has been transported back to UK waters on the Dutch heavy lifting ship, MV Swan.

Costs have ballooned for Devonport's refit dock

HMS Nottingham crashed at North Howe Island, 200 miles north east of Sydney.

Devonport Management Limited (DML), the private company which runs the yard, said winning the contract would have preserved 200 jobs for more than 18 months.

Last week, the government was forced to step in with taxpayers' money to bail out the refit of nuclear submarines at the Plymouth yard.

Design and construction delays of a new Royal Navy purpose-built refit centre at Devonport has seen costs soar from �650m to �933m.

The Ministry of Defence will pay �849m, leaving taxpayers with a bill of at least an extra �199m, a National Audit Office (NAO) report revealed.