The Ministry of Defence (MoD) has signed a long-term deal with BAE Systems LSM assuring its supply of bullets and other munitions.
The private firm's Land Systems Munitions subsidiary will pour investment into three plants in Britain over the first five-years of the 15-year partnership agreement.
Officials at the Ministry of Defence (MoD) say the deal is good news because it assures Britain "security of supply" as well as "operational sovereignty".
World munitions manufacturing has reached its maximum capacity at present, with western states heavily involved in the struggle for security in Iraq and Afghanistan.
BAE Systems LSM's managing director, David Allott, said his firm had been overstretched in the last three years, following at least ten years of rationalisation. He added he hoped "world-class facilities at each of our plants" would reduce this pressure, however.
The firm will be able to shore up employment around the plants in Birtley, Glascoed and Radway Green and invest in new machinery, facilities and personnel as a result of the munitions acquisition supply solution (Mass).
"The forward order book it gives allows us to take a long-term strategic view," Mr Allott explained.
"We will work with the MoD to ensure the UK has the necessary skills and resources, not only to support existing usage patterns, but also to be able to increase output and design new types of ammunition when required."
Colonel David Collins said confidence in supply was "absolutely fundamental to operational success".
Increased production "across the board" had already "contributed to success in Iraq and Afghanistan" and would remain a requirement in the future, he added.
More ammunition is consumed during preparing for operations than in them, meaning the unknown scale of Britain's military activities is mitigated to an extent.
And the MoD is keen to point out the deal allows for price changes depending on shifts in market prices for key commodities, preventing it losing out because of metal price shifts.
Armed forces minister Bob Ainsworth said: "Today's partnering agreement secures the long-term supply of ammunition to our armed forces.
"The 15-year programme will ensure that the UK has a modernised, sustainable munitions industry which will support British jobs and protect our capacity to produce ammunition."