HAMPSHIRE based shipbuilder VT is all that stands between the contract to build Britain's warships and submarines going to the Americans.

As reported in later editions of yesterday's Daily Echo, the Hedge End based company, formerly known as Vosper Thornycroft, is the only potential British bidder for the warship and submarine arm of defence giant BAE systems. The only other name in the hat is America's General Dynamics.

A spokesman for VT refused to comment but details of a "tentative" and "recent" interest from VT and General Dynamics were confirmed by BAE.

If the US company won it would bring the curtain down on centuries of proud warship-building history in Britain. BAE's naval division is the prime contractor on the British government's £10 billion aircraft carrier programme. It also holds contracts to build nuclear submarines and destroyers for the Ministry of Defence.

On top of the carrier deal BAE also has contracts to assemble the next generation of Astute class nuclear submarines in Barrow in Furness. VT has already linked up with BAE on the construction of Type 45 destroyers for the Royal Navy.

The naval business's annual turnover is reckoned to be around £800m but is currently understood to be operating at a loss.

VT employs hundreds of Southampton workers in Portsmouth after moving down the coast from its historic Woolston home earlier this year. BAE also employs around 250 people in Southampton and the Isle of Wight.

Southampton Itchen MP John Denham said the move could be good for the region.

"Although it is early days yet, it sounds like it could be very positive for the area," he said. "It's a very exciting opportunity for VT and it would surely simplify some of the problems there have been in the past with getting different warship builders to communicate properly.

"We do collaborate with the Americans on a lot of things but when you have a strong warship building capacity and expertise like we do in Hampshire no one wants to see it go overseas."

BAE is understood to be positioning itself for a merger with other US groups. Bosses there have indicated that the under-performing naval arm makes the possibility unattractive.