The consortium had been awarded "preferred bidder" status for the deal, British Defence Secretary Geoff Hoon announced.

Hoon, speaking at a base of EADS unit Airbus in Broughton, Wales, added that the government could "now move ahead with the negotiations on the contract".

The British deal is seen as crucial for the Franco-German EADS in pushing a tanker adapted from its Airbus A330-200 airliner as an alternative to US aircraft manufacturer Boeing.

Boeing, which in a joint bid with leading British defence contractor BAE Systems had offered Britain tankers based on its 767 model, has up to now enjoyed a virtual monopoly in the air refuelling market.

It was not a complete defeat for BAE Systems however as it owns 20 percent of Airbus. EADS owns the remaining 80 percent.

The proposed deal with European consortium AirTanker -- led by the European Aeronautic Defence and Space Company, and including Rolls-Royce, Cobham and Thales -- would safeguard around 7,500 jobs across Britain.

"This will secure ultimately thousands of jobs right across the UK economy, particularly ... here in the northwest (of the UK)," Hoon said.

"The total value of the contract, if it goes ahead, will be in the order of 13.0 billion pounds, it is a huge investment in the UK airspace industry."

Hoon would not speculate about a date for the final signing of the contract, saying: "No negotiator puts the date on a negotiation".

The move nevertheless brings a step nearer the Ministry of Defence formally awarding the private finance initiative project to AirTanker Ltd.

Under the PFI contract, industry would own and maintain the aircraft as well as providing training, infrastructure and some personnel, while the Royal Air Force would undertake military operations.

Further negotiations would continue over the coming months to finalise the contract, which would be the MoD's biggest PFI project to date.

EADS naturally welcomed Monday's announcement.

"The British government is well known to be a very demanding customer which requires the best for its highly respected armed forces," EADS joint chief executives Philippe Camus and Rainer Hertrich said in a joint statement.

"We -- together with our partners Cobham, Rolls-Royce, Thales and VT Group -- will be proud to provide the RAF with the very best in air-to-air refuelling capability. It is a crucial role and we are grateful for the trust placed in us by the UK."

Camus meanwhile announced that he would formally step down on May 11.

AirTanker proposes using 15 Airbus A330 planes to refuel fighter jets and other RAF aircraft.

The planes would be converted to passenger planes and used on charter flights or military transport trips, when not being used for refuelling.

The contract would run for 27 years and the first plane was expected to be come online in 2010.

British union officials also hailed the government's announcement.

The move was "a very welcome recognition of the global strength and competitiveness of the UK's manufacturing workforce", said Transport and General Workers' Union deputy general secretary Jack Dromey.

Shares in EADS nudged up 0.08 percent to 23.80 euros in late afternoon Paris trade. The CAC 40 index added 0.12 percent to 4,039.47 points.

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