The deal, the biggest joint venture ever in the European defence industry, was seen as crucial for the credibility of the European Union's commitment to strengthen its military capability and coordination.

Tuesday's signing confirmed orders from the seven European nations for 180 A400M military transport planes, while executives said they were confident of at least another 200 from elsewhere.

Germany has ordered 60 aircraft, France has ordered 50, Spain 27, Britain 25, Turkey 10, Belgium seven and Luxembourg one.

Delivery is expected from 2008 or 2009 to replace ageing military transport planes such as the US Hercules C-130 and the Franco-German Transall C-160.

The overall project, from research to production, is estimated at about 20 billion euros (23.7 billion dollars).

It is expected to create or secure 40,000 jobs in Europe over two decades, 10,500 of them in Germany, with orders so far generating an initial revenue of two billion euros by 2005.

The contract was inked in Bonn, western Germany, by OCCAR, the organisation representing the seven countries, and Airbus Military, the Airbus subsidiary created for the project.

Richard Thompson, the commercial director of Airbus Military, predicted at least 200 further orders with interest from Canada, Norway, South Africa and Sweden.

"We think a conservative view is 200 aircraft in the coming 15-20 years on top of the 180 already planned, so we are looking at roughly 400 in total," he told a press conference.

The development phase would be carried out at the Airbus site in Toulouse, southern France, and subsequent production concentrated at the Spanish city of Seville.

Airbus Military called it "the most ambitious European military procurement programme ever undertaken."

Its parent company Airbus is owned to 80 percent by the European aerospace group EADS and to 20 percent by Britain's BAe Systems.

The A400M programme has taken seven years to get off the ground, following the withdrawals of Italy and Portugal and reduced orders both from Germany and Britain which brought the initial total down from 196 aircraft to 180.

Tuesday's signing became possible after a German parliamentary commission gave the final go-ahead last week for Berlin's order, which had been cut from 73 aircraft due to financial problems but was still the most significant.

The A400M, with its four turbo-prop engines, is being billed by Airbus as the world's fastest new-generation aircraft of its kind, markedly cheaper to run than the Transall and with significantly more lift capability.

Capable of flying unrefuelled for 4,400 kilometres (2,750 miles) and at a speed of up to 780 kilometres per hour, it will be a vast improvement on the current generation of transport aircraft.

It will take a maximum payload of 37 tonnes, which could range from heavy armoured vehicles, artillery and helicopters to cargo pallets and troops.

The A400M would be the transport backbone of Europe's rapid reaction force, which is being created independently of NATO.

By developing its own airlift capability, Brussels would no longer have to rely on US-built aircraft to deploy troops quickly to crisis zones.

Europe's inability to transport troops and hardware was highlighted during the 1999 Kosovo crisis, when countries often had to rely on US help.

The United States spends twice as much as Europe on defence, four times as much on research and development and eight times as much on research studies, EADS co-chief executive Philippe Camus said.

"Europe is not homogenous and buys 16 times more (defence) equipment from the Americans than the Americans buy in Europe," he added.

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