Fears are mounting that a billion-pound contract to build a new fleet of ships for the Royal Navy could go to a Japanese company. The move would trigger dismay in UK military circles and would be seen as a major setback for the country’s shipyards, struggling with dwindling order books.

It could also have political consequences as a decision to award the contract to an overseas firm might damage the government.

The National Shipbuilding Strategy makes it clear that Royal Navy warships must be built in the UK for reasons of national security. But ministers confirmed in parliament last week that the new fleet solid support ships, which will carry ammunition and explosives, will not be classed as “warships”, which means they can be built by companies outside the UK.

A list released under the Freedom of Information Act reveals that several foreign companies attended the event when the government launched the competition to build as many as three fleet solid support ships at an estimated cost of up to £1bn.

They include Japan Marine United Corporation and Mitsui Engineering & Shipbuilding. Other interested companies included South Korean shipbuilders and a state-owned Spanish yard.

The revelation has triggered alarm bells at the GMB union, which complains that Japanese shipbuilders are subsidised, putting them at an advantage to their UK-based rivals. It says the fleet should be seen as warships because they are armed and take part in counter-piracy and counter-narcotics missions. The union estimates that up to 6,500 jobs could be created or secured, including 1,805 shipyard jobs, if the contract stays in the UK.

“This news will cause real concern for shipbuilding workers who already face an uncertain future as the aircraft carrier programme winds down,” said Ross Murdoch, GMB national officer.

“It is vital that we preserve our defence shipbuilding capabilities and this order would help secure thousands of jobs. It is a mockery of competition to force UK yards to bid against international competitors who enjoy subsidies that are denied to our employers and GMB members.”

Labour, the SNP and the unions argue the contract should be restricted to UK shipyards. House of Commons briefing paper

There was a furore in 2011 when the UK arm of Bombardier announced it was cutting more than 1,400 jobs at the UK’s last remaining train manufacturing plant, in Derby, after losing a £3bn government contract to a German rival. The recent decision for the UK’s passports to be made outside the UK was also seen in some circles as an own goal by the government.

A House of Commons briefing paper notes that “Labour, the SNP and the shipbuilding trade unions argue the contract should be restricted to UK shipyards to support the shipbuilding industry, secure jobs and retain skills”.

In an attempt to up the ante, last week Jeremy Corbyn called for more major public contracts to go to British companies to shore up the country’s industrial base following Brexit.

But the government wants to find savings in its defence budget and needs international firms to bid for contracts to keep prices down.

Last week it was reported that the tender process for the navy’s new Type 31 frigates will have to be restarted as manufacturers struggle to meet the government’s price cap of £250m per vessel. It is thought only two firms were interested in bidding.

An MoD spokeswoman said: “All our warships are built in the UK. Our fleet solid support ships are being procured through international competition because there is no demonstrable national security reason why procurement needs to be restricted. British shipbuilding yards are encouraged to bid for our fleet solid support ships.”