A new £1bn contract is set to be announced for reactors to power the next generation of Britain's nuclear submarines.
Defence Secretary Philip Hammond has agreed the deal as part of Government plans to replace the Vanguard fleet that carries the Trident nuclear deterrent.
The money will be used to build two reactor cores. One will be used for the seventh Astute Class attack submarine, which are nuclear-powered but not nuclear-armed.
The other reactor could be used for the first of the next generation of nuclear-armed submarines.
However, the Government insists that in line with a Liberal Democract instance on looking for a cheaper alternative, no final decision has yet been made.
The money will also be used to fund an 11-year refit of the Rolls-Royce five-year-old plant at Raynesway, Derby, which will carry out the highly specialised work.
The deal, which will be announced on Monday, will directly create 300 jobs.
Sky's Mark Stone said: "The complicated part is that this isn't to replace the missiles.The nuclear missiles that Britain has don't pass their sell-by date until about 2040.
"This is regarding the replacement of the vehicle which these [nuclear] missiles are contained in - the submarine."
"The reason it's controversial is the Lib Dems have not wanted a like-for-like replacement.
"The current system is that we have four submarines - nuclear-powered and nuclear-armed - that travel around the world. They need to be replaced.
"Should they be replaced like-for-like or should they be replaced with another type of vehicle, like an air vehicle or a land-based system."
The Conservatives are committed to a full renewal of the UK's fleet of four Vanguard-class submarines by 2028.
But Lib Dem defence minister Nick Harvey has been conducting a review of possible cheaper alternatives.
The first of the four Vanguards had been due to leave service in 2022, but the Government extended the vessels' lives as part of the 2010 Strategic Defence and Security Review.
Final decisions about ordering replacements do not have to be taken until 2016, after the next general election.
Last month Mr Hammond awarded contracts worth £350m to UK companies to design the next generation submarines.
An MoD spokesman said: "This Government is committed to maintaining a continuous submarine-based nuclear deterrent and announced last May that design work would begin to replace our existing submarines.
"Following a Trident value for money study carried out as part of the Strategic Defence and Security Review, we are proceeding with initial work to renew the nuclear deterrent, but a final decision will be taken in 2016.
"As part of the Coalition Government agreement a review is also being carried out into alternative systems for maintaining a credible nuclear deterrent."
