A Rheinmetall Boxer CRV drives off of the Armoured Fighting Vehicle Field Firing Training Area at Puckapunyal Range, Victoria, while participating in the Land 400 Risk Mitigation Activity on 22 February 2017. Pic: CPL Sebastian Beurich/DEFENCE DEPARTMENT

A Rheinmetall Boxer CRV drives off of the Armoured Fighting Vehicle Field Firing Training Area at Puckapunyal Range, Victoria, while participating in the Land 400 Risk Mitigation Activity on 22 February 2017. Pic: CPL Sebastian Beurich/DEFENCE DEPARTMENT CPL Sebastian Beurich

QUEENSLAND is one step closer to securing one of the biggest spending Defence projects in Australian history - and hundreds of new jobs.

Rheinmetall Defence Australia will today reveal it will base its operations in Queensland if it wins the Defence Department's $5 billion contract to build the next generation of war machines.

In a major snub to the Andrews Government, which was desperately trying to woo Rheinmetall to Victoria, the German company has chosen Queensland to build 225 state-of-the-art combat reconnaissance vehicles, ensuring decades of work.

BAE Systems Australia, which is also vying for the Defence deal, is believed to be leaning towards Victoria.

It is understood that Rheinmetall was swayed by the Palaszczuk Government's lucrative offer to build in Queensland, being near Army and Air Force bases, the state's manufacturing supply chain, the unprecedented support from 26 Federal Coalition politicians and The QT Build Them Here campaign.

At least 450 direct jobs will be created and potentially thousands of indirect jobs throughout Queensland.

BOXER CRV tank as supplied by Rheinmetall

But the final hurdle rests with the Turnbull Government, which will award the contract early next year.

If Rheinmetall wins the bid, it will export its machines throughout the world plus set-up jobs and training by an Australian-first military vehicle centre of excellence (MILVEHCOE).

Premier Annastacia Palaszczuk hailed the first-step.

"This is a massive win for Queensland, and testament to the skills and capability of our advanced manufacturing companies and their workforce," Ms Palaszczuk told The QT.

"It's been a really intensive 10-month period, where the Queensland Government has gone head-to-head with other states.

State Development Minister Dr Anthony Lynham said defence industries employed about 6500 Queenslanders, generating more than $4.2 billion in annual revenue.

"Most of these will be highly skilled, highly paid advanced manufacturing and engineering jobs, the jobs of the future we want for Queensland.

"The transfer of technologies and skills to Queensland companies will make them even more competitive globally and will have far-reaching benefits across the entire industry.

"A whole new military vehicle manufacturing industry will be a game-changer for decades to come."