Defence budgets have spiralled to £3 billion more than predicted, according to the official spending watchdog.

The National Audit Office catalogued a damning list of increasing costs and delays on defence projects for vital equipment including the controversial Eurofighter.

The spending watchdog found the defence firm BAE Systems was responsible for 90 per cent of the overspends on four projects.

The Eurofighter is now 60 months late on coming into service and £1 billion over budget.

The new Nimrod air warning planes are 71 months late and £400 million over budget. The new generation of Astute submarines is running 43 months over time and is costing an extra £1 billion.

And the Brimstone missile system is also £126 million over its original cost estimates.

The National Audit Office told the Ministry of Defence, which is fighting another row over equipment shortages and bracing itself for Lord Hutton's verdict on the death of weapons expert Dr David Kelly, was warned to "raise its game".

The report is likely to increase pressure on embattled defence secretary Geoff Hoon.

The extra cost is equivalent to six per cent of the entire MoD major projects budget for last year.

Sir John Bourn, head of the National Audit Office described the findings as "disappointing".

"I am disappointed by the large rises in costs and delays on four older projects in particular," he said.

The row was made worse by the admission from the firm's former boss that the company routinely under-quoted to ensure it won big contracts.

Sir Raymond Lygo claims the company has routinely quoted unrealistically low prices to the government to ensure it won big contracts.

The former head of Britain's biggest defence contractor said: "I think it's a well-known fact, whether anybody admits it or not, is you'll never get any programme through the government if you ever revealed the real cost.

"Whatever you want to get through government, you have to first of all establish what is the Treasury likely to approve in terms of money? And then you think, what can you offer for these terms within the parameters that have been set? And pretty often it is pretty nearly impossible.

Defence minister Lord Bach said blame could not be left solely with the department.

"Industry must recognise its share of responsibility for the serious difficulties that have been encountered," he said."They must also raise their game to improve performance across acquisition and ensure that projects are delivered to cost and time."

A spokesman for BAE said the firm had made improvements over the last year to control costs.

"The report covers the period up to March 2003. Since then, enormous progress has been made on these various projects, working very closely indeed with the customer, the MoD," he said.

"BAE Systems has formulated and is now executing continuous improvement in all areas under its control in the company's performance on major MoD projects.

"The company said at the beginning of last year that it would be going to do something about continually improving its performance, and it has.''