The UK is to go ahead with its £500m ($800m) contract with General Dynamics (GD) to build new vehicles for the army, defence sources have said.

The vehicle programme, known as the future rapid effects system, will continue, although there could be alterations to the contract.

UK Prime Minister David Cameron met defence chiefs to reach a final agreement on military spending cuts, which are scheduled for release on 19 October.

GD was awarded a contract by the UK for seven prototype Scout armoured vehicles and training equipment on 1 July 2010.