The Scottish defence industry could lose contracts worth billions of pounds as well thousands of jobs after independence, the UK Government yesterday warned.

The Tory-LibDem Coalition's move comes as Labour tries to increase pressure on the SNP.

Shadow defence Secretary Jim Murphy will use a speech on defence in Edinburgh to accuse the party of being "feart" of independence.

In response to a report by MPs called Separation Shuts Shipyards, ministers said that Ministry of Defence contracts which "sustain thousands of skilled jobs and generate billions of pounds for the economy of Scotland" could be under threat.

The Coalition Government also questioned whether Scotland would continue to have "privileged access" to the existing UK-US defence trade co-operation treaty. But the Scottish Government disputed the claims.

A spokesman said: "The Scottish Government will support defence companies to ensure the sector develops sufficiently to compete effectively in the international environment and will do everything to comply with all EU and international regulatory frameworks to ensure that any company based in Scotland can compete in global defence markets."