About 300 jobs at a tank factory are at risk after it failed to win a major Ministry of Defence contract.

BAE Systems, in Braunstone Frith, Leicester, had been competing with two American firms for a £4bn deal to make 1,300 hi-tech armoured vehicles for the British Army.

The Ministry of Defence (MoD) yesterday announced US company General Dynamics had won the contract.

BAE managers last week warned that missing out on the deal would immediately place 150 jobs in jeopardy and put in doubt the future of the entire Scudamore Road factory, which employs 300 people.

Speaking last night, a BAE spokesman said: "It's clearly not good for the future of the site. We need to digest the announcement and look at what the implications will be."

The Leicester site has spent five years developing electrical, navigational and weapons systems for the new tanks.

About 60 job cuts were announced at the factory last year and some of those have already been made.

However, there was a chance the remainder could have beed saved, if the contract had been secured.

BAE said about 500 jobs would be lost across the country without the contract, and the future of its factory in Newcastle would be put in doubt.

Jobs will also be affected in Leicester by the MoD's decision to delay a contract to upgrade 450 Warrior armoured troop carriers.

General Dynamics said the contract would create 200 jobs at its plant in South Wales.