BAE Systems has been chosen as the preferred prime contractor in the £2.7 billion programme to build two new aircraft carriers for the Royal Navy - but the ships will be based on a design by former bidding rivals Thales UK.

Defence Secreatry Geoff Hoon announced this afternoon that the defence contractors will form an alliance with the MOD to develop and build the ships, expected to displace up to 60,000 tons - making them the largest and most powerful surface vessels ever built in the UK.

More details to follow.