Thales UK, the Crawley-based defence contractor, has won a £160 million contract to install a new signalling system on London's Piccadilly Tube line.

The company, which employs more than 3,000 people in Sussex, has been hired by Tube Lines, the firm upgrading three of London Underground's deepest lines.

Thales' engineers will use sophisticated signalling technology similar to that already used on the Docklands Light Railway to help trains run more quickly and safely.

More than 530,000 passengers use the Piccadilly line every weekday.

The project, due to be completed by 2014, will help increase capacity by 20 per cent.

Parts of the Piccadilly line signalling system are more than 40 years old and rely on mechanical and electrical components that are unreliable and difficult to maintain.

The Thales model uses computers fitted to each train to interact with an induction loop between the tracks, recording the train's location within centimetres.

The computer relays this information to a control centre, which responds with messages telling the train how fast to go in order to maintain the most efficient speed.

It also helps the driver stay a safe distance from the train ahead.

If the signal between the onboard computer and central control is broken the train will be stopped until permission is given for it to continue.

A train can still be driven manually but if the driver exceeds a speed limit or leaves a station when the route is not set, emergency brakes will be automatically applied.

If there is a signal failure, trains run in emergency mode at 10mph.

Thales is already working with Tube Lines on new signalling systems for the Jubilee and Northern lines for delivery in 2009 and 2011 respectively.

Terry Morgan, chief executive of Tube Lines, said: "The Thales train control system offers the reliability that passengers on the London Underground rightly demand.

"More frequent trains will reduce the time people spend waiting on platforms and faster trains will mean quicker journeys.

"The team working on the new signalling systems for the Jubilee and Northern lines are already making excellent progress and they will be able to apply their expertise and the lessons learned from these lines on the Piccadilly line."

Alex Dorrian, chief executive of Thales UK, said: "This is a very large resignalling project and we are extremely proud of the renewed confidence Tube Lines is placing in our experience after the Jubilee and Northern lines contract."

The Piccadilly line covers 44 miles and serves 52 stations between Cockfosters and Heathrow or Uxbridge.

Almost 80 trains are required to operate the morning and evening peak period service.