The Ministry of Defence has announced that BaE Systems, Babcock and Rolls Royce have won £350m contracts for the design of next-generation nuclear submarines.

Defence Secretary Philip Hammond announced the details as the Government continues its attempts to find a replacement for the current Trident nuclear programme.

Mr Hammond described the contracts, which are part of an overall £3bn investment, as an "important step towards renewing the UK's nuclear deterrent".

In the latest round of contracts, £328m has been awarded to BaE to work on the overall design of the submarines, with Babcock getting £15m for in-service support and Rolls Royce £4m for the reactor design.

The Ministry of Defence has announced that BaE Systems, Babcock and Rolls Royce have won £350m contracts for the design of next-generation nuclear submarines.

Defence Secretary Philip Hammond announced the details as the Government continues its attempts to find a replacement for the current Trident nuclear programme.

Mr Hammond described the contracts, which are part of an overall £3bn investment, as an "important step towards renewing the UK's nuclear deterrent".

In the latest round of contracts, £328m has been awarded to BaE to work on the overall design of the submarines, with Babcock getting £15m for in-service support and Rolls Royce £4m for the reactor design.

The Government will this week make clear its commitment to renewing the UK's nuclear deterrent by announcing the design contracts for the next generation of nuclear-armed submarines. There have been reports that a Ministry of Defence review led by the Lib Dem minister Nick Harvey will call for a scaled-down Trident replacement.

There are "hard days ahead" for Afghanistan, the US President has warned at the NATO summit. Barack Obama made the remarks as France's new President Francois Hollande confirmed he would pull French troops out by the end of 2012, two years ahead of schedule. NATO is planning a security handover in the country in 2014.

Over £500,000 worth of metal has been stolen from military bases by soldiers in the last two years, and sold on to supplement low wages. Other stolen items include pregnancy kits, ammunition and radios.

Nato leaders have warned that an early withdrawal from Afghanistan would be detrimental. President Hollande's election promise to withdraw all his troops by the end of this year could cause a rise in insurgent attacks, the military leaders say. The G8 summit will try to find common ground between the 28 Nato members and the French President in order to stop the united front presented in Afghanistan from fracturing. Both President Obama and David Cameron still support the deadline of 2014.

David Cameron has approved military observers being sent to Syria as the violence continues.

A senior British officer will be going to help organise 300 UN observers, but Number 10 says more could be sent, eventually including British personnel, the Daily Mail reports.

The UK's former ambassador to Yemen will also be going to Syria to advise the opposition and help the rebels co-ordinate political strategy.

A government review is challenging the idea that Britain's nuclear weapons must be able to strike Moscow - one of the cornerstones of Cold War defence policy. In a move that could have implications for the future of the Trident nuclear programme, Armed Forces Minister Nick Harvey is apparently questioning whether the UK needs to be able to strike as far away as the Russian capital. Writing in the FT today, his Lib Dem colleague Sir Menzies Campbell makes an explicit call for the Government to abandon the doctrine at this weekend's Nato summit in Chicago.

Philip Hammond has ruled out reviewing the armed forces redundancy programme after announcing the Ministry of Defence's budget is back in balance after a savage round of cuts. The Defence Secretary said reserve money would be used to pay for equipment and not save any of the 60,000 civilian and military posts being axed.

The Ministry of Defence has eliminated the "yawning black hole" it inherited in its finances and delivered a balanced budget, Defence Secretary Philip Hammond has announced.

Speaking in the House of Commons, Mr Hammond said his department had taken "tough decisions" to deal with the "chaotic" budget deficit, and pledged to ensure that the MoD “never again gets into the mess it did in early 2010.”

The Defence Secretary said the U-turn on aircraft carrier jets, announced last week, was "the final piece of the jigsaw” in creating a "formidable, adaptable and well equipped Armed Forces backed by balanced budget, disciplined processes and an efficient and effective department."

"The best way I can support our Armed Forces," he said, "as they restructure and refocus themselves for the future, is to give them the assurance of stable and well-managed budgets and the confidence that the equipment programme is affordable and deliverable.

"The only way to ensure in the long term, the ability to project power to protect our national security and to ensure that our troops have the equipment they need is to have defence budget that is in balance."

The Defence Secretary also denied he was planning to scrap historical regimental names such as Black Watch, saying he understood the "vital role" the regimental structure plays in the Armed Forces.

However he refused to rule out any further amalgamation or disbandment of Scottish regiments.

"We are going to have a smaller army, "he said.

"You can’t have a smaller army without some structural changes, and I will make an announcement to the House as soon as I am able about the structure of Army 2020."

Defence Secretary Philip Hammond has claimed he has succeeded in plugging the £38bn Ministry of Defence funding gap.

In an interview for the Sunday Times, Mr Hammond said: "In the next few days we will be in a position to make the grand announcement that I've balanced the books."

Shadow Defence Secretary Jim Murphy was dismissive of the claim, calling it "posturing" that would be of little reassurance to service personnel set to lose their jobs.