A DELAYED Royal Navy shipbuilding programme is being put back on track, offering hope to thousands of North-East workers.

The Ministry of Defence (MoD) yesterday confirmed it was moving forward with a project to replace naval oil tankers, known as Military Afloat Reach and Sustainability vessels - or Mars.

The scheme, worth up to £2bn, could help plug a two-year order book gap at the Swan Hunter yard on Tyneside.

It should also provide contracts for some of the 8,000 workers in the region's defence supply chain.

David Bowles, chief executive of Northern Defence Industries, which represents businesses in the sector, said: "This is good news for the supply chain.

"Mars is a very important project for industry in the North of England.

"We anticipate that our members will want to participate and we will do all we can to make sure that happens."

Analysts believe the MoD will order up to eight ships for the Royal Fleet Auxiliary (RFA), as the Navy needs to replace ageing single-hull oil tankers with double-hulled vessels.

Legislation requiring tankers to have double hulls comes into force in 2010, although the Navy can claim exemption for Government-owned ships.

Swan Hunter has been urging the Government to bring some Navy contracts forward.

The Wallsend yard is already starting to shed jobs as it completes fabrication work on another RFA vessel.

Its order book is empty from next year until 2008, when it is expected to start cutting steel for a £2.9bn aircraft carrier project.

The workforce has already fallen from 1,500 to about 700.

All of the fabricators are expected to be laid off by the end of the year.

No one from Swan Hunter was available for comment.

The Mars programme has been stuck in the concept phase since early last year, and the industry was not expecting any movement until next year.

But the MoD has made inquiries at the yards, looking for a "physical integrator" - the lead company to oversee the project and be liable for financial penalties if it overruns.

Following the integrator's appointment, there would normally be contract talks in the assessment phase.

But the MoD is thought to have already completed much of that stage.

An MoD spokesman said: "The Mars project remains in the concept phase.

"Subject to internal MoD approvals, the department hopes to be in a position to select for the role of project integrator later this year."

The in-service date for the vessels remains 2010, but analysts expect this will be revised to 2012.