More than 500 jobs will be created in Sussex after the Government chose a European consortium to supply refuelling aircraft to the RAF.

AirTanker, which is led by European defence giants EADS and includes Crawley-based defence contractor Thales UK, was chosen for the £13 billion contract.

The deal safeguards about 7,500 jobs in the defence industry and will be the Ministry of Defence's (MoD) biggest private finance initiative (PFI) project.

Under the PFI deal, industry will own and maintain the aircraft as well as providing training, infrastructure and some personnel. The RAF will undertake military operations.

AirTanker, which also includes Cobham, Rolls-Royce and VT Group, proposes using 15 to 20 Airbus A330-200 planes to refuel fighter jets and other RAF aircraft.

When the Airbuses are not being used for refuelling they will be converted to passenger planes and used on charter flights or military transport trips. They would be converted back to their military role when needed.

The contract will run for 27 years and the first plane is expected to come on line in 2010.

AirTanker was originally selected as the final company to enter contract talks with the MoD in January last year.

Chief executive Robin Southwell said the consortium had a marvellous opportunity but added: "Clearly there is a lot of detailed work still to be done."

Union officials welcomed the announcement, which TGWU deputy general secretary Jack Dromey said was "a very welcome recognition of the global strength and competitiveness of the UK's manufacturing workforce".

Thales UK, a shareholder and founder member of AirTanker, will provide modern simulator equipment and training for the programme.

Justin Walker of Thales UK, said: "Our continued success reflects the British Government's confidence in Thales UK as a major force in defence contracting. It is an important boost for our Crawley businesses and all our employees in the area."

Laura Moffatt, MP for Crawley said: "I am delighted to hear this news and have worked with Thales UK to make representations to Government on its behalf to get this good result. This programme is good news for Crawley."

Last year Thales UK beat off competition from a US consortium to secure an £800 million contract to supply pilotless eye-in-the-sky spy planes for the armed forces.

Thales employs more than 2,000 people in Crawley.