The Ministry of Defence's £4 billion order for new aircraft carriers will lead to the creation of Britain's sole shipbuilder.

BAE Systems, Europe's largest defence company, and VT Group, formerly Vosper Thorneycroft, will merge their shipbuilding assets as part of the industrial plan to build the carriers. The new company will be announced next week after the MoD gives the carrier project the go-ahead.

The merger will bring the last remaining shipbuilding yards at Portsmouth and at Govan and Scotstoun on the Clyde into one group, estimated to be worth about £1 billion.

The Government has pushed for the merger of the yards as a condition of the carrier project because it believes that it is better to have a single national champion in shipbuilding rather than two competing companies.

Ministers hope that the merged yards will be better positioned to win export orders and this, combined with the carrier work, should guarantee the 4,500 jobs involved.

However, if military officials succeed in killing the carrier project because of budget concerns, there could be heavy job losses at all the yards.

This would be particularly damaging in Scotland, where the bulk of the carrier work will be done. BAE's yards at Govan and Scotstoun, formerly called Yarrow, will build the central hull section.

The blocks will then be taken to the Rosyth dockyard on the Firth of Forth to be joined with a bow block being built by VT in Portsmouth.

Babcock, which owns Rosyth, has said that the carrier project will create 800 jobs at the yard, which is in the neighbouring constituency to Gordon Brown's. Defence industry sources said last night that the new jobs at Rosyth would be lost in addition to thousands more at the other yards if the carriers were cancelled.

A century ago Britain was the global leader in shipbuilding but famous yards on the Clyde, Tyne and Mersey have closed or changed function in the face of cheaper competitors from Japan, South Korea and China.

Among the yards to have closed are Scott Lithgow on the Clyde and Swan Hunter on the Tyne. Harland & Wolff, the Belfast yard that built the Titanic, now assembles oil rigs.

Other smaller yards still operate but most are involved only in repair or oil-related work.

The BAE-VT joint venture will be chaired by Sir John Parker, who is chairman of National Grid Transco and a former shipbuilder himself.Other companies involved in the carrier project include Rolls-Royce, which will supply the power plants, and Thales UK, which is designing the ships.

The MoD is negotiating with the French Government to use the British design for a proposed French vessel. This would allow the two governments jointly to order some items, which could reduce the price by up to £200 million.

Although the ministry will only give the formal go-ahead to the carriers next week, it has already pre-ordered many items for the project, including the steel.

Total expenditure by the MoD is already thought to have exceeded £1 billion.

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