British Prime Minister Gordon Brown has confirmed the Defence Export Services Organisation (DESO) will be shut down, leaving UK defence contractors to work through another government department.
Brown told members of parliament in a written statement that responsibility for defence trade promotions will be moved from DESO to UK Trade and Investment.
"This will provide much greater institutional alignment across government," he says.
Brown says that specific features of defence exports will be taken into account, for which the Ministry of Defence would still hold some involvement.
Institutional arrangements, however, will come into effect as quickly as possible after an implementation plan to replace DESO is completed by the end of 2007.
Rumours about the future of the department began circulating last month after news of a review of the department was leaked.
DESO, which was set up in 1966, spends £15m a year on helping British firms sell military equipment abroad.
By Elizabeth Clifford-Marsh