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The government has sold its 19 per cent stake in defence firm QinetiQ for £257.3 million but will retain control of the company through a 'golden share'.

The Ministry of Defence has sold all its remaining 125 million shares at 206p per share to several institutions, taking advantage of a recent surge in QinetiQ's stock.

However, the government will keep a special share in the company that prevents the firm falling into foreign hands.

Minister for defence, equipment and support, Baroness Taylor, said: "Ten years ago our in-house defence laboratories faced a difficult and uncertain future. The privatisation of QinetiQ transformed it into a successful British-based company employing around 13,000 people, and raised £830 million for the taxpayer."

Sir John Chisholm, QinetiQ non-executive chairman, added: "The MoD's sale of QinetiQ shares is consistent with its previously stated intention that it would sell its entire holding of ordinary shares."

QinetiQ was created from the MoD's in-house defence laboratories in 1991 and 31 per cent was sold to US investment firm Carlyle Group, with a view to eventually floating the firm.

When QinetiQ was floated on the London Stock Exchange in 1996, the government was criticised when it became clear that the Carlyle Group and several senior civil servants had profited hugely from their shares.

In addition, the initial public offering (IPO) was only available to institutional investors, excluding the general public.

Tomas Carruthers, chief executive of Interactive Investor, criticised the deal: "Once again the private investor - that's you and me - is treated with utter contempt.

"The IPO of QinetiQ was a privatisation, but the government didn't let private investors participate.

"Now they come to sell their remaining stock and once again, the private investor gets the cold shoulder. Our money was good enough when we were paying our taxes to build QinetiQ but it isn't good enough when the government sells it off."

QinetiQ is one of the largest defence technology organisations in the world and employs around 1,300 staff globally.