Weeks of political wrangling have come to an end with the announcement that BAE Systems has won a key aircraft contract.

Defence secretary Geoff Hoon announced that work under the Hawk jet contract will remain in the UK.

The Cabinet was reported to have been split down the middle on the potential £800 million deal, while Hoon was also reported to have been at odds with his own civil servants who favoured a rival Italian bid.

Ministry of Defence staff were said to have warned Hoon that such the move would waste taxpayers' money and risk a £1.8 billion budget overrun.

And as late as Wednesday morning the Financial Times claimed trade secretary Patricia Hewitt was trying to block BAE's bid.

But the minister pleased industry and trade unions with a decision to back the British bid to build 20 training aircraft for the RAF and take up the option for 24 more.

"Hawk 128 is an excellent aircraft. It is the right choice for training the pilots of our future advanced fighter jets and the right decision for our defence industrial capability," said Hoon.

"This is excellent news for BAE Systems, its employees at the Brough factory on Humberside, where Hawk 128 will be designed and built, and for the several hundred people involved in the UK supply chain for the aircraft.

"Over 800 Hawk aircraft are currently in service with some 17 customers. In a highly competitive global market, Hawk variants have won the last three Advanced Jet Trainer competitions and have demonstrated their status as one of the UK's finest exports.

"The future sales prospects for Hawk are extremely bright and I hope this decision will encourage other potential customers to place their orders.''

Hewitt said the choice was indicative of the priority the government is giving to British manufacturing.

"This was a very tough decision but underlines our commitment as a government to the new defence industrial policy and manufacturingstrategy," she claimed.

"Hawk bring major economic benefits to Humberside and wider to the UK through key suppliers.

"Hawk is a good aircraft with significant export potential for the UK."

BAE chief executive Mike Turner said the deal would guarantee a minimum of 2000 jobs.

"We recognise that this has been an important and difficult decision for the government in the context of spending priorities," he said.

"The UK commitment to Hawk will directly secure 2,200 jobs across BAE Systems at Brough and 70 companies within the supplier base.

"We are delighted by this decision especially for our employees at Brough who will be producing the best advanced jet trainer in the world."

And TUC general secretary Brendan Barber said that the news would offer relief for his members.

"Unions will give this a warm welcome," he said. "It is good news for jobs and prosperity."

"This is a significant decision. Hawk had become a test case of whether the government will use public procurement in an intelligent way to boost hard-pressed manufacturers. The government has passed with flying colours."