FRENCH secret agents have been accused of trying to sabotage the North-East's billion pound bid to supply the Greek government with Challenger 2 tanks.

The contract for the 60 tonne tanks, made at Vickers Defence Systems, at Scotswood, beside the River Tyne in Newcastle, is believed to be worth up to £2.4bn.

Vickers faces competition from France, Germany and America - but it is the French who have been accused of spoiling the trials of their rivals.

During tests in Greece, several British and American tanks suffered navigation problems, and a military source revealed that jamming equipment was interfering with a high-tech satellite global positioning system.

The tanks determine their location and distance from a potential target using signals from three or more satellites. Blotting out one satellite signal can mean a miss-read of up to 100 yards.

A transmitter is believed to have been hidden near the test site and activated by remote control when the British and American tanks went past. The French were accused of planting the device after an inquiry.

However the technical problems were later discounted by the Greek government.

No one at Vickers was available for comment yesterday.

The world-renowned Tyneside plant, which employs 650 workers, has been overshadowed by sell-off rumours since its parent company was bought by Rolls Royce last year.

Winning the tank contract would ensure its future health and bring a much-needed boost to the region