The UK Ministry of Defence (MoD) has awarded a contract to BAE for the Luma IR 105mm infrared artillery shell.
As per the terms of the £5.5m contract, BAE will deliver 4,000 rounds of the artillery shell to UK armed forces with immediate series production.
Luma IR can be fired from the 105mm light gun, which is currently in service with UK forces in Afghanistan.
The first carrier payloads, which will include white light, smoke and potentially sensor payloads, will be ready for qualification by early 2012.
Work will be carried out at the company's facilities in Karlskoga, Sweden, and the deliveries are scheduled to take place during 2010 and 2011.
BAE also supplies an 81mm mortar infrared round to the UK MoD and is developing a 155mm carrier round as a part of the agreement.