GLASGOW's last two shipyards were today saved - but with the loss of more than 800 Scottish jobs.

BAE Systems broke what sources called "difficult news" to its workforce this morning at its Govan and Scotstoun yards on the Clyde.

The announcement comes despite earlier fears that one of the yards, Govan, would shut.

Instead BAE System will close a facility in Portsmouth. Across the UK more than 1700 jobs are to go.

A company source said: "We are entering a period of consultation with more than 800 affected workers in Glasgow and Rosyth.

BAE said: "Following detailed discussions about how best to sustain the long-term capability to deliver complex warships, BAE Systems has agreed with the UK Ministry of Defence that Glasgow would be the most effective location for the manufacture of the future Type 26 ships.

"Consequently, and subject to consultation with trade union representatives, the company proposes to consolidate its shipbuilding operations in Glasgow with investments in facilities to create a world-class capability, positioning it to deliver an affordable Type 26 programme for the Royal Navy.

"The cost of the restructuring will be borne by the Ministry of Defence. The implementation of these restructuring activities will sustain BAE Systems' capability to deliver complex warships for the Royal Navy and secure the employment of thousands of highly skilled employees across the UK.

"In 2009, BAE Systems entered into a terms of business agreement (ToBA) with the Ministry of Defence that provided an overarching framework for significant naval shipbuilding efficiency improvements in exchange for commitments to fund rationalisation and sustainment of capability in the sector.

"The agreements announced today, together with an anticipated contract for the design and manufacture of the Type 26 Global Combat Ships programme, will progressively replace that ToBA."

The MoD plans to commission three new ocean-going Offshore Patrol Vessels for the Royal Navy in a deal that will sustain jobs in the UK's warship building industry.

The new ships, which will be built by BAE Systems at their shipyards on the Clyde, will play a key role in counter-terrorism, counter-piracy and anti smuggling operations.

The agreement with BAE Systems provides work for the company between the completion of the Queen Elizabeth Class Aircraft Carriers and the Type 26 Global Combat Ship, securing the vital skills needed to build the UK's future warships.

Defence Secretary Philip Hammond  is also announcing today that more than £100 million will be invested in Portsmouth Naval Base, which will be home to both HMS Queen Elizabeth and HMS Prince of Wales.

The money will expand the dockyard to ensure it is ready for the arrival of the Royal Navy's biggest ever warships as well as the Type 45 destroyers which are based in Portsmouth.

Today's announcement brought concern in Scotland but provoked an immediate backlash in England.

The shipbuilding firm has been conducting a lengthy review of its UK operations for the last 18 months. It had long signalled one or more of the yards would close.

Councillor Gerald Vernon-Jackson, leader of Portsmouth City Council, blamed the political situation in Scotland for the decision.

He said: "I am extremely worried. It is less than a year until Scotland votes on whether to become independent and we seem to be losing out on so much."

One of the city's MPs said it was a serious "error" to give the work to Scotland, which will now leave England without a strategic naval shipyard if Scots vote Yes next year.

Portsmouth, however, will continue to repair ships for the Royal Navy.

BAE Systems is currently helping to build two giant aircraft carriers for the Royal Navy. Large chunks of the vessels are being made in Glasgow before being brought to Rosyth dockyard, where they are being assembled. That facility belongs to Babcock but hundreds of BAE Systems staff and contractors work there on the carrier contract.

Today's news essentially the company scaling down from the carriers but keeping enough of workers to do the Type 26 work.

Union convener Jamie Webster said:  "We are bruised but not beaten. We will do all we can to save as many jobs as possible."

Ahead of the announcement one worker, Alex Taylor, 63, from Pollokshaws, said: "We always knew this was going to happen. I'm at the end of my career, it's the younger workers I feel sorry for."

When asked about the mood inside the yard, Mr Taylor said workers were "very worried".

John Reid, 53, timber yard worker from Maryhill, said: "I think what's happening at the ship yards is a total disgrace. Govan will be a ghost town if lots of jobs go at the yards.

"Shops will close because the workers won't have any money to spend on food for the families.

"The local shopping centre will also be hit. This will affect the whole community."

Pamela Galloway, 19, a hairdresser from Govan, said: "The shipyards are a huge part of Govan's community and they are very important to the area's history.

"It won't just be history that will be lost, shops and wee cafés could close too because a lot of the workers aren't here anymore."

Angela Esposito, 23, a student from Govan, said: "I'm originally from New Jersey, but I'm still fully aware of how important the shop yards are to Govan.

"Unless workers can find sustainable jobs elsewhere, they will find it very hard to support their families. The area will find it hard to recover from a jobs blow like this."

One local man, who did not wish to be named, said: "Shipbuilding is it for Govan, it's all we have. This place has been so run down, we're on our knees.

"And with these jobs going, things are only set to get worse."