HUNDREDS of jobs could be created in Gwent if a consortium wins an £800m Ministry of Defence contract to supply a high-tech military communication system.

US company Northrop Grumman plans to locate its project headquarters in Oakdale and initially employ 250 people if it is successful.

And the firm said the project could possibly generate an additional 2,000 jobs as local supply chains were developed.

Two groups are competing for the contract to supply the UK's next generation of radio communication and unmanned reconnaissance systems.

The Watchkeeper system will dramatically improve the intelligence, surveillance and reconnaissance gathering of the military, according to experts.

Community leaders have welcomed the announcement that Northrop Grumman want to go to Oakdale Business Park.

Penmaen councillor Allan Pritchard, former deputy leader of Caerphilly council and one of the driving forces behind the industrial estate, said: "This is excellent news.

"If they decide to locate here we will welcome them and this will show some of the doubting Thomases that we do not have empty sheds and we are developing into a high quality business park with good jobs and we hope that other companies will follow.

"We are not operating on just a local market but a world market." AM Don Touhig stressed that it depended on the consortium winning the contract and it was not yet a done deal.

But he added: "It shows we can continue to attract high skilled jobs to the area and I wish them every success with their bid."

Mr Touhig said it would be a 30 year project which meant long-term jobs. "It will be very important for us if we do win and I am pleased they have chosen to come to south east Wales and Oakdale in particular."

Oakdale Business Park is already home to another global high-tech defence contractor. General Dynamics UK opened its Bowman military communications programme in 2002.

Tom Vice , a senior vice- president with Northrop Grumman, said they wanted to build on the success of the Bowman project. "Bringing together Northrop Grumman and General Dynamics will see Oakdale become the UK and European centre of excellence for integrated