The RAF has already agreed to reduce its order of Eurofighter Typhoon jets from 232 to 160.

BBC: The UK's defence dilemma

Hundreds of BAE workers have already taken voluntary redundancy following a slowdown in orders for the Eurofighter Typhoon fighter.

BBC: MP Mark Hendrick

The decision will, however, be a disappointment for European manufacturers behind the Eurofighter Typhoon, including British defence company BAE Systems, and to US-based Boeing, producer of the Super Hornet.

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It will be powered by a combination of a hybrid rocket and a jet engine from a Eurofighter-Typhoon.

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"The unanimous decision is for the Eurofighter, the Typhoon, " Chancellor Wolfgang Schuessel said after a Cabinet meeting.

BBC: Austrian boost to Eurofighter project