A £1.2bn contract has been awarded to build the Royal Navy's new attack submarine Audacious.
The BAE Systems deal, which will secure 3,000 jobs at Barrow-in-Furness in Cumbria, will progressively replace the Trafalgar Class currently in service.
A further £1.5bn has been committed to the remaining three Astute Class submarines being built, the MoD said.
Defence Secretary Philip Hammond said the contracts would offer the UK's armed forces "greater certainty".
"This funding demonstrates our commitment not only to a key Royal Navy capability, but also to the submarine industry in Barrow, which will play a vital role in Britain's defence for decades to come," he said.
"This is an extremely good news announcement for the 5,000 or so people at Barrow whose jobs depend on the submarine programme and the thousands more across the UK in what is a very high-tech end of our engineering in this country."
Audacious is the fourth of the seven Astute Class submarines being built for the Royal Navy.
The first two boats, HMS Astute and Ambush, are currently undergoing sea trials. The third boat, Artful, is reaching the final stages of her construction at Barrow shipyard. All three are to be based at Faslane on the Clyde.
Early work has been started on the fifth vessel, Anson, while preparation has begun on submarines six and seven which are as yet unnamed.
It emerged last month that Astute had encountered several problems during its sea trials, including leaks and electrical switchboards which were were found to be fitted incorrectly.
Concerns also emerged last year about the accuracy of nuclear reactor monitoring instruments during testing.
Mr Hammond said: "This contract marks an important step forward in the progress of our attack submarine programme and moves the Royal Navy closer to adding more of these highly-advanced and powerful attack submarines to its fleet.
"Our ability to commit an additional £1.5bn for boats five, six and seven underlines the benefits of a balanced budget and fully-funded equipment programme that gives our armed forces greater certainty.
"This funding demonstrates our commitment not only to a key Royal Navy capability, but also to the submarine industry in Barrow, which will play a vital role in Britain's defence for decades to come."