BAE Systems is to cut 1,775 jobs at its yards in Scotland and England and end shipbuilding altogether at Portsmouth in southern England.
The company confirmed that 940 staff and contractor posts will go at the Portsmouth site, which will retain repairs and maintenance work.
Some 835 jobs will be lost at yards in Govan and Scotstoun in Glasgow, Rosyth in Fife and Filton, near Bristol.
The cuts follow a drop in work after the end of aircraft carriers work.
BAE Systems said it had made the cuts because of a "significant" drop in demand.
But the company, which heads a consortium that includes Babcock and Thales UK, unveiled a proposed contract for the manufacture of three offshore patrol vessels, which would help support shipbuilding until work begins on the Type 26 Global Combat ships.
It also said it had agreed changes to the Queen Elizabeth-class aircraft carrier contract it signed with the Ministry of Defence (MoD) in 2009.
This would see the consortium's fee move to a 50-50 risk share arrangement which would provide greater cost performance incentives.
End Quote BAE statementUnder these proposals, shipbuilding operations at Portsmouth will cease in the second half of 2014"
A statement released by BAE Systems said: "Under these proposals, shipbuilding operations at Portsmouth will cease in the second half of 2014.
"Subject to consultation, Lower Block 05 and Upper Blocks 07 and 14 of the second Queen Elizabeth Class Aircraft Carrier will be allocated to Glasgow.
"The company remains committed to continued investment in the Portsmouth area as the centre of its Maritime Services and high-end naval equipment and combat systems business."
BAE said it had agreed with the MoD "that Glasgow would be the most effective location for the manufacture of the future Type 26 ships".
"The company proposes to consolidate its shipbuilding operations in Glasgow with investments in facilities to create a world-class capability, positioning it to deliver an affordable Type 26 programme for the Royal Navy," BAE said.
It said the cost of this restructuring would be borne by the MoD.
'Sustain capability'BAE said it would now begin consultation to cut 1,775 jobs "to result from these restructuring proposals".
This would see 940 posts go in Portsmouth in 2014 and 835 across Filton, Glasgow and Rosyth, through to 2016.
The statement added: "The cost of the restructuring will be borne by the Ministry of Defence.
"The implementation of these restructuring activities will sustain BAE Systems' capability to deliver complex warships for the Royal Navy and secure the employment of thousands of highly skilled employees across the UK."
David Hulse, GMB national officer and chair of the Confederation of Shipbuilding and Engineering Unions' shipbuilding national committee, said: "Following today's announcement from BAE Systems, we are able to confirm that no shipyard will be closing even though there are substantial job losses in the pipeline.
"There is no doubt that this is a devastating day for the UK shipbuilding industry and the company will have justify to us the job losses planned.
"We have arranged a two-day meeting with the company at Farnborough next Monday and Tuesday that will be attended by officers and shop stewards from all the yards and all the unions.
"This meeting will examine in detail the business case and all aspects for scheduling work in the yards to complete building the carriers, starting work on the Type 26 ships and any other work."
'Big mistake'The independent MP for Portsmouth South, Mike Hancock, said ending shipbuilding at Portsmouth would be a difficult decision to reverse.
He added: "The expertise is very, very much dedicated to shipbuilding. And once they disperse the workforce in various parts of the south of England I don't think it's going to be easy to put that back together.
"I think the government are making a big mistake for the future of ship building in the UK, particularly military shipbuilding".
Mr Hancock said he believed next year's referendum on Scottish independence played a part in the government's thinking.
"Alex Salmond was on a no lose situation", he said.
"He would benefit if they closed the yard saying they're being punished. If they keep the yards open he'll say you're being bribed so from that point of view he's in a no lose situation.
"But I think the people of Portsmouth are going to be paying a very heavy price for I think a slightly cynical manoeuvre".
BBC Scotland understands that workers at BAE's Scotstoun and Govan yards in Glasgow have been sent home for the day.
They were told by management there would be about 800 jobs lost in Scotland but no breakdown was given.
Workers who left the yard said they were worried and disappointed, but that the announcement was not unexpected.
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