NORTH-EAST shipyards are likely to win a major part of a multi-billion-pound order for two aircraft carriers.

The contract will create 700 jobs at McNulty's, in South Shields, and at A and P Tyne, at Hebburn, according to an industry source.

The news follows a disastrous two years for shipyards on the Tyne. The closure of Swan Hunter yard last year was claimed to signal the death of shipbuilding on the river.

McNulty's, which specialises in refitting oil rigs and platforms, employs about 300 staff, while A and P employs about 600, mainly refitting and converting vessels.

An A and P spokesman said: "We are hopeful we can bring some work to the Tyne. Those options would mean working with McNulty's."

One source said the yards were about to clinch a share of a £3.9bn order to build two 65,000-tonne Ropyal Navy aircraft carriers.

Contracts have already been split between yards at Glasgow, Barrow, Portsmouth and Rosyth.

But the source said that managers at Barrow will sub-contract a major share of their work to the Tyneside yards.