The deal includes GKN Piranha armoured personnel carriers, Vosper Thornycroft 46-metre patrol boats, British Aerospace Hawk training aircraft, and Starburst missiles by Shorts Missile Systems, a joint venture between Short Brothers of Belfast and Thomson-CSF of France.
The contract will help secure 500 jobs at Shorts Missile Systems. It is the second export of the Starburst missile to the Middle East and the company is marketing it strongly among a number of other countries in the Gulf region.
The deal was the second large defence contract for Britain in a week. Australia announced a pounds 1bn order for Hawk aircraft last Monday.
It was also the first large arms sale for Britain in the Gulf for years. The British have lost out to the United States and France in weapons sales to the oil-rich region.
Qatar is in the process of modernising its armed forces, now equipped mostly with French-made arms. Britain is also competing with American and French arms manufacturers to sell 50 main battle tanks to Qatar's 8,000-strong army.
Mr Portillo said after talks in Doha last month that he had offered a comprehensive Gulf security proposal to Qatar. Diplomats said the offer was part of a British bid to find a fresh foothold in Gulf Arab states from which it voluntarily withdrew in 1971.
Mr Portillo said: "This understanding further enhances the already broad defence relationship between Qatar and the United Kingdom."Reuse content