The contract, worth 13 billion pounds (16.6 billion euros, 26 billion dollars), was handed to AirTanker Ltd, a consortium led by Franco-German group EADS which includes Cobham, Rolls-Royce and VT Group of Britain as well as Thales of France, the government said.

Hundreds of jobs would be created and thousands safeguarded thanks to the deal, it said in a statement.

Just last month, in a stunning upset, EADS and its US partner Northrop Grumman won a contract worth 35 billion dollars to build up to 179 air tankers for the US military.

EADS great rival, US aerospace giant Boeing, has since challenged the deal, putting it on hold for the time being.

On Thursday, Britain's Ministry of Defence (MoD) said the AirTanker consortium would supply the Royal Air Force (RAF) with 14 aircraft based on the Airbus A330-200.

"A fleet of new Airbus A330-200s will replace the RAF's TriStar and VC-10 aircraft under a 13 billion pound ... deal signed today with AirTanker Ltd," Junior Defence Minister Baroness Ann Taylor said in a statement.

The announcement came on the second day of a state visit to Britain by French President Nicolas Sarkozy and his new wife, model-turned-singer Carla Bruni-Sarkozy.

"The deal is good news for British jobs: up to 600 are expected to be created by AirTanker and the deal will safeguard up to 3,000 jobs directly at British sites, with thousands more sustained indirectly," the MoD said.

The 14 aircraft, due to enter service around 2011, will undertake air refuelling and also passenger air transport tasks.

The deal will see EADS become the leading supplier of military transport aircraft to the RAF, according to a separate statement from the European Aeronautic Defence and Space Company.

"Through this agreement, EADS will become the RAF's leading supplier of transport aircraft, complementing its existing commitment to supply 25 A400M aircraft to the UK forces," it said.

EADS chief executive Louis Gallois added: "We are proud to be providing the RAF with the very best air-to-air refuelling solution available internationally.

"The MoD's requirements are known to be highly exacting and we are grateful that its trust has been placed in EADS and our consortium partners, Cobham, Rolls-Royce, Thales and VT Group."

The AirTanker consortium was selected as preferred bidder for the multi-billion-pound contract in 2005.

Meanwhile, British aircraft engine maker Rolls-Royce said in a separate statement that its Trent 700 engines would power the new AirTanker fleet of RAF planes.

"This deal represents great news for the Royal Air Force and great news for British industry and jobs," Baroness Taylor said.

"The A330s will provide a state-of-the-art air-to-air tanker and passenger aircraft supporting operations around the world and delivering British forces to operational theatres."

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