A £1.1bn contract to produce new reactor cores for the next generation of the UK's nuclear-armed submarines has been awarded to Rolls-Royce.
The MoD says the investment will secure 300 jobs and fund the refurbishment of the firm's plant at Raynesway, Derby.
The deal - part of plans to replace the Vanguard fleet which carries Trident nuclear missiles - has been criticised by the Scottish National Party.
But the defence secretary said it would ensure UK sovereign nuclear capability.
"Having balanced the MoD's books we can now invest in vital strategic capabilities to meet the present and future defence needs of the UK," Philip Hammond said.
"This contract will secure hundreds of highly skilled jobs for UK industry, while retaining our sovereign nuclear capability.
"The Raynesway site has played a key part in the production and maintenance of our nuclear deterrent for more than 50 years. This regeneration will make sure it continues to do so for many years to come."
Angus Robertson, the Scottish National Party's (SNP) leader in Westminster, said: "People in Scotland do not want Trident. Church leaders, the Scottish Trades Union Council, the Scottish Government and the Scotland's Parliament are all against weapons of mass destruction being in our waters.
"Despite this the UK government is prepared to send £1bn of taxpayers' money on a needless programme and then expect the people of Scotland to accept weapons of mass destruction being dumped here," he said.
Britain's nuclear weapons system is currently made up of four Royal Navy submarines, based at the Faslane naval base on the Clyde, which can deploy Trident ballistic missiles carrying nuclear warheads.
Announcing the latest investment, the Ministry of Defence said replacing the existing infrastructure at Rolls-Royce with state-of-the-art nuclear reactor core production facilities would cost about £500m.
A further £600m will be spent on producing new reactor cores for the Astute and Successor Class submarines.
The Ministry of Defence has already set aside £3bn to begin work on the new submarines to replace the four Vanguard class boats.