Ministers will overhaul Britain's naval shipbuilding plans in a move which could trigger a jobs bonanza for UK workers.
Defence Minister Jeremy Quin confirmed a switch to the Government's strategy for ordering vessels, with procurement overhauled “to spark a renaissance in British shipbuilding".
But the announcement came as two former heads of the Armed Forces delivered a scathing verdict on fresh military cuts.
Outlining the Future Defence and Security Industrial Strategy, Mr Quin told MPs the shake-up to shipbuilding would benefit British workers over foreign yards.
It would “make clear our ability to choose to procure warships of any description here in the UK”, he said.
He added: "Its significance can be summed up in a few sentences – it signals a shift away from global competition by default towards a more flexible, nuanced approach."
The announcement boosts hopes British workers will benefit from the £1.5billion deal to build three Fleet Solid Support ships to supply Royal Navy aircraft carriers, frigates and destroyers at sea.
A contract competition will be triggered within weeks.
The Ministry of Defence said in October that while “international companies will be invited to work in collaboration with UK firms to feed in their skills and expertise ... the successful manufacturing team must be led by a British company”.
Shadow Defence Secretary John Healey backed the ending of the "global competition by default" policy.
He added: "It's high time we put an end to a British Government being just as happy buying abroad as building in Britain.”
However, workers' leaders demanded greater commitments from the Government over what work would go to British firms.
Confederation of Shipbuilding and Engineering Unions general secretary Ian Waddell said: "As always with this Government, once you strip away the fanfares of the rhetoric the details tell a different story.
“On the one hand, it is a massive step forward for the MoD to recognise the strategic importance of being able to design, build and support Navy and auxiliary vessels in the UK and the positive impact this will have on jobs.
“On the other hand, the MoD is completely keeping its options open on using competition, including internationally, as the procurement model for auxiliary ships and potentially now for warships, which is actually a step backwards.
“That approach will increase rather than remove uncertainty in the industry, as each procurement will be decided on a case-by-case basis."
Meanwhile, ex-defence top brass raised fears over Britain's military might after the latest Government cuts.
Ten thousand troops are being slashed from the Army, with warplane and tank numbers also axed.
Ministers are instead trumpeting new technology and cyber power to boost performance and “lethality”.
Outlining his concerns in evidence to the Commons Defence Committee tonight, retired Chief of the Defence Staff General Lord David Richards believed the Kremlin would cheer cuts to the military and scoff at the focus on technology.
He said: “I certainly don't think Russia is going to be worried about what we are doing – it will see that we are going to have a much smaller conventional force.
“It could suddenly be an asymmetric attraction to those countries with very large Armed Forces to use those in a more traditional way while we neuter each other in the more hi-tech areas.”
He added: “What worries me now is we are actually cobbling together forces and making the best of a job hoping that other things like cyber will compensate.”
Asked if UK forces would “retain the capabilities required to deploy to larger and more complex, high-intense conflicts”, fellow former CDS Gen Lord Nick Houghton said: “No, they won't.”
He added: “We appear to be reducing down to a a sort of one-shot, quite long-notice, not-long sustainment set of Armed Forces.”
