HUNDREDS of jobs have been secured at Swan Hunter after contract renegotiations with the Government put the shipyard in line to receive £84m.

The money, which is part of the payment for two Royal Fleet Auxiliary vessels, will ensure the financial security of the yard for more than a decade.

Swan Hunter, which has yards on Tyneside and Teesside, ran £160m over budget for the ships after problems adapting an off-the-shelf design.

Originally, the Ministry of Defence (MoD) refused to pay the extra costs, leaving Swan Hunter with a revenue shortfall and threatening the financial future of the yard.

The new deal, which has also seen the completion dates for the two ships pushed back, will see the MoD pay the yard £84m, while Swans covers the additional costs.

The two vessels are expected to be finished by 2006 and 2007.

GMB regional secretary Tom Brennan said the contract marked a significant development for the yard, allowing the business financial breathing space for defence contracts already in the pipeline.

Mr Brennan said: "This is great news for the whole region.

"We are expecting some major contracts to come here very soon, which could see work secured on the Tyne and the Tees for ten to 15 more years.

"The danger was whether the yard would survive till that time, but this news means the situation is now under control."

Mr Brennan said the priority was to ensure that new defence shipbuilding contracts were brought to the region soon.

The GMB is meeting Defence Secretary Geoff Hoon next month to ask him about the new work.

Swan Hunter, which has a yard at Port Clarence, on Teesside, has already secured a contract to work on two aircraft carriers, but the project, originally due to begin next year, has been delayed.

According to Mr Brennan, much of the new work could end up on Teesside.

A spokesman for the MoD confirmed the £84m payment to Swans.

He said: "We are confident the company will provide the Royal Navy with two very good ships."