Job fears at troubled autopart and distribution giant Unipart are set to ease this week thanks to a £28m contract in the pipeline from the Ministry of Defence.

Spokesman for the MoD, Laurie Manton, said: "I can confirm that Unipart is the preferred bidder for the contract. In other words, it is all but signed. It just needs the i's dotting and the t's crossing. The deal, worth £28m over five years, is due to go live on November, so I think that pretty well confirms that it really will go ahead."

The deal means that Unipart will provide more than 1,000 different types of packaging for the MoD.

Two years ago, Unipart bought autoparts company Partco, in Cowley, for £179m, but it has performed poorly since then.

Earlier this year, Unipart boss John Neill called a general meeting of shareholders to seek permission to maintain borrowings of £260m.

The company has seen its share price tumble from 108p last year to 42p. About 2,000 of Unipart's 10,000 employees are also shareholders, who between them own 55 per cent of the company.

A spokesman for Unipart said: "This is great news for our company."

She added: "It will mean a small increase in jobs in Cowley, but it is too early to put an exact number on this until details of the contract are finalised."