The government is to allocate an extra £32m to support Yeovil-based AgustaWestland in the development of its civil helicopter programme.
The announcement was made as part of the Spending Review. Chancellor George Osborne unveiled the review earlier on Wednesday.
Yeovil Liberal Democrat MP David Laws said it was "fantastic news for Westland and Yeovil".
He said he and the company had lobbied for the support.
Mr Laws said: "This is a crucial investment in our local economy and it could help to secure a new civil helicopter business for Yeovil in the future."
Meanwhile, Taunton Deane Liberal Democrat MP Jeremy Browne welcomed the protection of 40 Commando Royal Marines, based at Norton Fitzwarren, near Taunton, in Tuesday's Defence Review.
Ten percent of reductions to the Royal Marines' budget will be made in Plymouth.
Mr Browne said front-line personnel at Norton Manor camp would not be affected, but there may be a "small" reduction in back room staff.
He added that he had been reassured that the Ministry of Defence had no plans to sell off the Hydrographic Office in Taunton.
The amount of money local councils receive from the government will be cut by 7.1% each year over four years.
A Bath and North East Somerset Council spokesman said the authority was assessing what the Spending Review would mean for the services it provides.
A West Somerset Council spokesman said it would analyse "the potential broad impacts of the reported cuts in funding over the period 2011 to 2015".
North Somerset Council said it was working on its strategy to meet the funding gap.
South Somerset District Council said the cuts were as expected, but were still disappointing.
Ken Maddock, leader of Somerset County Council, said the Spending Review had confirmed the authority's expectation about the cuts it faced.
He said: "It has been made publicly clear that Somerset County Council already has a huge gap between income and spending and this announcement will only make it more difficult for us.
"There is no easy way to bridge this gap - and so we are committed to making the authority smaller, leaner and more efficient.
"We know many decisions we will be forced to take will prove unwelcome and unpopular but these tough choices and tough decisions are forced upon us by a unique set of financial problems at a national level through the government's deficit and at a local level with our own high debt.
"We will have to reduce some of our services and, sadly, in other areas we will have to stop doing what the public has been accustomed to seeing us do."
Mr Osborne announced that police funding would be cut by 4% a year.
Avon and Somerset Police Federation said officers would need to be more selective in the matters they deal with.