A Lostock company is bidding to win a £150m defence contract which would safeguard more than 400 jobs.

MBDA Missile Systems is competing with an American company for the order to provide precision guided bombs for the RAF. The contract -- to develop a new generation of precision bombs initially for fighter aircraft-- would also create an extra 20 jobs at the firm on the Wingates Industrial Estate, Westhoughton. MBDA yesterday unveiled a new plant at Mango Park, Lostock, where work on the bombs would be carried out if the bid is successful.

And as she opened the factory, Bolton West MP Ruth Kelly said it was one of the "biggest investments in the North-west for a long time". Factory bosses at MBDA Missile Systems said the contract would offer security for up to 450 workers.

Ms Kelly has lobbied Government defence chiefs urging them to give the contract to the firm.

An announcement on the contract is expected to be made next month and production would start in early 2005.

But MBDA is facing competition for the order from a United States rival, weapons manufacturers Raytheon.

If the Lostock firm is successful in its bid it would be the third significant contract awarded to MBDS over the last year.

Twelve months ago factory chiefs were celebrating MBDA being awarded a £220 million missile order to supply the JERNAS short range air defence system to the Malaysian government.

And last December it was announced that the world's most effective air-to-air missile would be made at Lostock after the Ministry of Defence awarded a £1.2 billion contract to a UK consortium led by MBDA.

Ms Kelly said of the new factory: "This is one of the biggest investments in the North-west for a long time. It shows confidence in the British aerospace industry and means we will be able to retain skills in the area.

"The company has submitted a very strong bid for the new system and that is being treated very seriously," she said.

The company, which has recruited 60 additional employees over the last three months, is optimistic that it will secure the new contract.

Ian Metcalf, business development manager, said: "We're quietly confident at the moment. Both firms would do some of the manufacturing in the UK but we hope that our status as a British company will count in our favour."

"It would be tremendous news if we get the go-ahead. This would be the first time in 15 years that the firm has been in a position to recruit additional staff for a new project."

A global market awaits MBDA if they are commissioned to make the weapon, which will initially be carried by the RAF's Harriers and Tornados. The precision guided bombs will also be compatible with Joint Strike Fighters when they are introduced in the future.

If the company fails in its bid, part of the new plant will remain redundant but Mr Metcalf insists the risk is worthwhile.

He added: "There is always a risk in business. We need to view this not as a risk, but as a challenge."