Defence giant BAE has dropped plans, put forward 15 months ago, to invest around £200 million building a world class "frigate factory" at Scotstoun - one of its two naval shipyards on the Clyde.

The plan would have seen the company close its Govan shipyard to consolidate activities at a single site at Scotstoun, a mile or so downriver from the Govan yard.

Instead, the company announced yesterday that, following completion of a strategic review, it had decided in favour of the more "cost-effective" alternative of keeping both yards open and that it would invest around £100m in Govan and Scotstoun over the coming years.

BAE's naval systems managing director Mick Ord said that the investment plan, the details of which have yet to be finalised, would be the "the most significant investment in the Glasgow shipyards in decades".

Both options had been examined by the company in detail over the last year, he said, and the final analysis had shown that keeping both yards going was "the most cost-effective solution and would deliver the best return on investment".

The decision to keep both sites open will see the bulk of the heavy steel cutting and fabrication work carried out at the Govan yard, which BAE leases from Clydeport, while the Scotstoun site, which the company owns outright, will concentrate on high-end engineering work.

The single site at Scotstoun option would have included the building of a 360 yard-long new dock hall capable of building two ships at once indoors. Such a brand new facility would have been able to churn out warships one-third faster than across both yards.

The main work for both yards in the coming years is expected to be the building of 13 new Type 26 frigates for delivery over the next 20 years. The multi-billion pound contract is expected to be divided into three batches which would see three of the new frigates built in the first batch and five each in the two subsequent batches.

None of the company's 3000 workers will lose their jobs as a result of the decision, the company claims, and it is even possible that new jobs could be created over the course of the frigate building contract.

"This is a great news story for Glasgow as we have been able to secure employment into the future," Mr Ord said.

Following a briefing to employees yesterday both the GMB and Unite unions backed the plan to keep both yards going.

GMB convenor Malcolm Lynn said that, although there had been "slight disappointment" that brand new facilities at Scotstoun would not now be built "overall it is a good news story as it secures work and jobs going forward".

"Unfortunately the company realised that the plans for a single site were simply not going to be financially viable and they have explained that decision to us," he said.

Lynn added that, although the single site plan would in the long run have allowed two frigates to be built concurrently, this option would actually have slowed down the frigate construction programme as building new facilities at Scotstoun would have taken several years during which time construction work on the ships themselves could not get underway.

Unite convenor Billy McKay said that, while a move to a single covered site at Scotstoun would have made working life more comfortable for employees during the winter months, most workers regarded the decision to keep both yards going as "positive for jobs and the possibility of more work in the future."

Mr Ord told The Herald that he hoped that the frigate contract with the Ministry of Defence would be signed early next year with the first steel being cut for the project in September 2016. Once the programme is in full swing, he said, the two site solution will allow the company to build and deliver one frigate a year.

The bulk of the £100 million investment will be made in the Govan yard, Mr Ord said, as it was expected that around 65 per cent of production hours would be in Govan and 35 per cent in Scotstoun. Instead of building the originally mooted frigate factory at Scotstoun, new construction halls will instead be built at Govan.

Last year Charlie Blakemore, BAE's then director of business transformation for its naval ships division, said that the company's preferred solution was to build the new frigates under a single roof in Scotstoun.

Blakemore, who was moved to a new job in BAE's military air division earlier this month, said that operating from a single site would be the most expensive solution but would deliver "significantly more benefits" and allow the company to "compete on a more level playing field".

The decision to keep both yards open has been welcomed by the SNP as well as the City of Glasgow.