Britain and France are to join forces to build a new generation of lethal drones as part of a controversial defence deal.

President François Hollande is due to arrive in Britain on Friday for a summit with David Cameron at RAF Brize Norton in Oxfordshire, where they are expected to agree to develop an Anglo-French Predator-type military drone.

Britain’s current programme relies upon American technology and is primarily operated out of the US due to restrictions on flying unmanned aircraft in European airspace.

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The move follows on from the 2010 Lancaster House accord, in which Britain and France agreed a series of measures to enhance defence co-operation including sharing aircraft carriers, joint expeditionary forces and training.

A Downing Street source said it is clear that unmanned combat systems, such as drones, was “where defence technology was going” and that it is becoming clear that it is an “essential piece of kit” for both British and French forces.

Last year, Britain and France agreed to launch a study into the feasibility of jointly developing drone technologies. Friday’s agreement will move that to the next stage although production will not begin for at least three years.

British defence company BAE Systems and Dassault Aviation, the French maker of Rafale fighter jets, will lead the project which is also expected to involve Rolls-Royce.

During the summit the leaders are also due to sign a €500m memorandum of understanding to build anti-ship missiles for French and British attack helicopters. In addition, they will confirm “progress” on creating a combined joint expeditionary force of 10,000 men by 2016, as well as further counter-terror co-operation.

Mr Cameron and President Hollande are also expected to discuss Syria and the EU.

Ahead of the meeting, a senior source close to Mr Hollande seemed to rule out French backing for EU treaty change before the proposed UK referendum on EU membership in 2017. The official said: “This doesn’t mean we won’t one day require treaties to be revised for the requirements of economic monetary union, but it is very, very unlikely this will be compatible with the British political calendar.”