Rolls-Royce is upgrading a UK plant as part of a deal to build reactor cores for the next generation of the UK’s nuclear-armed submarines.
The site at Raynesway, Derby, will benefit from investment worth £500 million over the next 11 years, extending its life by more than 40 years and protecting 300 highly skilled jobs.
Around £600 million will be spent producing nuclear reactor cores for the seventh and final Astute class submarine and the next generation fleet, known as the Successor class.
No decision will be made about whether to press ahead with the Successor subs until 2016 but they could be used to replace the Vanguard fleet, which retires in the late 2020s, and carries Trident weapons.
Today's announcement is being seen as a sign that the Tories plan to press ahead with renewing the UK's capability to carry Trident missiles after the next general election.
The move has been opposed by the Liberal Democrats, who want a cheaper way of maintaining the weapons.
Defence Secretary Philip Hammond said: "Having balanced the MoD's books we can now invest in vital strategic capabilities to meet the present and future defence needs of the UK.
"This contract will secure hundreds of highly-skilled jobs for UK industry, while retaining our sovereign nuclear capability.
"The Raynesway site has played a key part in the production and maintenance of our nuclear deterrent for more than 50 years. This regeneration will make sure it continues to do so for many years to come."
Shares in Rolls-Royce rose 1.5 per cent, while analysts said other defence firms, such as Babcock and BAE Systems, would also benefit from the Government's plans.
Jason Smith, who is Rolls-Royce's president of submarines and chief operating officer in nuclear, said: "This is excellent news that demonstrates the high level of trust the MoD has in both our technology and the expertise of our highly skilled workforce.
"This new facility will deploy advanced manufacturing techniques to enhance our world leading nuclear manufacturing capability."