This is the first export order for the EH101, produced jointly by Westland and Agusta of Italy, and will come as a huge boost to the West Country helicopter manufacturer.
Canada is to buy 15 search-and-rescue variants of the EH101, which will be built at Westland's Yeovil plant in Somerset, and 35 maritime patrol variants to be made in Italy.
John Major welcomed the order as 'an excellent illustration of our ability to sell overseas'. The Prime Minister added: 'This is an important boost for the British defence industry in a highly competitive market.
'It is good news for jobs at Westland and at many of the other British companies involved in the project.'
A Westland spokesman said that although the order would not create more jobs it would help to safeguard the future of the 6,000-strong workforce at Yeovil.
The deal takes Westland's order book to pounds 1.5bn and will strengthen its prospects of winning further overseas contracts for the EH101.
Last year Westland, in partnership with IBM, won a pounds 1.5bn order from the Royal Navy for 44 Merlin anti-submarine warfare EH101s. The Italian navy also plans to order up to 24 EH101s for a similar role.
All the helicopters for Canada will be built in Britain and Italy but they will be fitted out with mission systems in Canada by Paramax, a subsidiary of the American computer company Unisys.
Announcing the order, Marcel Masse, the Canadian defence minister, said the EH101s would replace Canada's ageing fleet of Sea King and Labrador helicopters.
Production is expected to begin in 1994, with the helicopters entering service in 1997 or 1998.
Alan Jones, Westland's chief executive, described the Canadian order as 'a major step forward for the EH101'.
Mr Jones added: 'The Anglo- Italian partnership has been strengthened by the Canadian involvement, and it increases the prospects of the EH101 becoming the standard aircraft across Nato.'
The total cost to Canada of the contract is Cdollars 4.4bn (pounds 1.94bn), but this includes the costs of bringing the helicopters into service with the Canadian armed forces, logistic support, training and spares. The value of the work to be shared by Westland and Agusta is Cdollars 2.8bn.
Westland's other contracts include a pounds 70m order from the Ministry of Defence for six Sea Kings and a Portuguese order for five Super Lynx helicopters.
The type of EH101 being bought by Canada is the utility version of the helicopter.
Westland is offering the same variant to both the British and Dutch armies for use as a troop carrier.Reuse content