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The Ministry of Defence (MoD) is to spend £200m on closing down the axed project to build nine new Nimrod spy planes, it has emerged.

The Nimrod MRA4 surveillance and reconnaissance planes were being built at BAE Systems sites in Stockport, Lancashire and East Yorkshire.

The project was ditched by the government in October's Defence Review.

The money was to be used on finishing the planes, but will now be spent on ending the contract with BAE.

A source said the sum included paying compensation to BAE Systems.

The MoD and BAE signed a contract in 1996 to build 21 planes. This was reduced to 12 and later nine.

'Difficult' decision

All were due to be handed over to the RAF by 2012, but the project was scrapped in an effort to save money.

Axing the project means large job losses, as about 1,000 people were working on the project at Woodford, near Stockport, and another 200 at Brough, East Yorkshire.

A further 500 in Warton, Lancashire, were due to support the planes in service.

An spokesperson for the MoD said: "Ministers and service chiefs have made clear that the decision in October's Strategic Defence and Security Review not to bring the Nimrod MRA4 into service was difficult, but it will not be reversed and the dismantling process is under way.

"The severe financial pressures and the urgent need to bring the defence programme into balance meant we could not retain all existing programmes.

"We will continue joint maritime patrol activities with our allies and will ensure the integrity of UK waters by utilising a range of other military assets, including Type 23 frigates, Merlin anti-submarine warfare helicopters and Hercules C-130 aircraft."