THE region's shipyards were last night assured by a Government minister that they will have a key role in building Royal Navy warships, but they must do more to win contracts.

Armed Forces Minister Adam Ingram was in Durham to meet representatives of Northern Defence Industries (NDI), an alliance representing small firms in the defence supply chain, which account for 8,000 jobs in the region.

His visit moved to allay fears at NDI and shipyard Swan Hunter that the industry would be destroyed if more military contracts are not forthcoming before a major aircraft carrier project starts in 2008.

Mr Ingram said: "We are absolutely determined not to lose our warship-building capabilities. There are some fine skills at Swans and we cannot afford to lose them.

"The MoD is not the problem. We are undoubtedly part of the solution. If it wasn't for defence expenditure, there would be no shipbuilding capacity. But companies have to be out there, winning commercial orders."

Swan Hunter has a gap in its order book from next year.

Yard owner Jaap Kroese has already indicated he will have to mothball his operations on Teesside and Tyneside, if no more MoD work comes along.

Mr Ingram said: "We recognise this and it is an issue within the overall shipbuilding industry.

"We have to find a solution to the fact that the order book may not match industry's planning and smooth that out."

The MoD is spending £3bn on two aircraft carriers.

BAE Systems and French group Thales will build the ships, but sub-contract work to Swan Hunter, a yard in Portsmouth and two Scottish yards.

Swan Hunter had hoped for £500m of work, creating 1,500 jobs, but industry insiders believe the figure will be lower.

Mr Ingram said: "It is up to the yards to determine who gets what share of the spoils."