A DECISION is expected any day on who will win the coveted £2.7bn contract to build the biggest warships ever made in Britain.

BAE systems, which yesterday axed more than 1,000 jobs, is vying for the contract with French-owned company Thales Naval, which is working with Northern Defence Industries (NDI) to secure the deal.

Building work for the two aircraft carriers will create up to 5,000 jobs in shipyards in Teesside and Tyneside, regardless of who wins the contract.

A further 5,000 jobs would go to local supplies used for materials and computer systems on board the vessels.

Jack Dromey, national organiser for the TGWU, said that reliable sources had told him that civil servants in the MoD had recommended that the aircraft carrier order should be given to the French firm.

It would be a further blow to BAE, who yesterday announced that more than 1,000 jobs would go from its sea systems business, including 700 in Barrow-in-Furness, Cumbria, 265 at shipyards on the Clyde and 50 from the company's underwater systems operation at Waterlooville, Hampshire.

Up to 30 posts will be axed at the firm's head office in Farnborough, Hampshire.

The cuts have been blamed on a "significant drop" in workload at shipyards and will take effect in the coming months.

BAE operates the Royal Ordnance factory in Birtley, near Gateshead, and last April announced that the workforce would be halved from 300 to 150 by natural wastage and voluntary redundancies.

The defence group said yesterday's announcement had no connection with its discussions with the Ministry of Defence over the new aircraft carriers or another contract to build new aircraft.

Brian Phillipson, group managing director of BAE's Sea Systems division said he was "deeply saddened" by the job cuts. "We have worked very hard to find appropriate additional work to bring into our yards and it is with deep regret that we are having to take these actions," he said.

The MoD said a decision was expected shortly on the long-awaited contracts