Of the total, $945 million will go the British company to manufacture cores for an Astute class attack sub and the first vessel in the British navy's Successor class to its nuclear-armed Vanguard fleet.
The other $755 million will be spent on an 11-year "regeneration" of Rolls-Royce's Raynesway plant in Derby, England, extending its operating life by more than 40 years, British Defense Minister Philip Hammond said.
"Having balanced the (Ministry of Defense's) books we can now invest in vital strategic capabilities to meet the present and future defense needs of the U.K.," Hammond said. "This contract will secure hundreds of highly-skilled jobs for U.K. industry, while retaining our sovereign nuclear capability."
One of the nuclear cores will be used for the seventh and last in the line of SSN Astute class fast-attack submarines, which are nuclear-powered but not nuclear-armed. That fleet -- described as "the largest, most advanced, and most powerful attack submarines ever operated" by the British navy -- is at various stages of build-out and development.
The other core is destined for the first Successor class vessel, a new generation of submarines to carry Trident nuclear-tipped ballistic missiles. The first of those are scheduled to enter service in 2028.
The defense ministry will decide whether to approve the Successor class's full production in 2016, manufacturer BAE Systems says.
Meanwhile, the upgrades to Rolls-Royce's Raynesway industrial complex will mean the retention of 300 jobs, the Defense Ministry declared.
"The Raynesway site has played a key part in the production and maintenance of our nuclear deterrent for more than 50 years," Hammond said. "This regeneration will make sure it continues to do so for many years to come."
Local officials greeted the news with cheers, saying its positive effects will be felt within the economy, the Derby Telegraph reported.
"This investment will create opportunities within the local supply chain," George Cowcher, chief executive of Derbyshire and Nottinghamshire Chamber of Commerce, told the newspaper.
"This is excellent news that demonstrates the high level of trust the (Defense Ministry) has in both our technology and the expertise of our highly skilled workforce," added Jason Smith, Rolls-Royce's president of submarines and chief operating officer for nuclear. "This new facility will deploy advanced manufacturing techniques to enhance our world-leading nuclear manufacturing capability."
Not everyone was so pleased with the decision, however.
Angus Robertson, leader of the Scottish National Party in Parliament, said the Scottish people were opposed to nuclear weapons on moral grounds as well to what he called an "obscene waste of money" on the Trident program while the government is at the same time reducing military manpower.
"From being a deterrence during the Cold War, Trident has itself now become one of the biggest defense risks we face with the cost of replacement threatening the future of conventional forces and bases," he said.
"Trident is a jobs destroyer, indeed, if capital expenditure of ($1.7 billion) was invested in infrastructure projects it would support as many as 15,000 jobs -- compared to only 300 (Hammond) has confirmed."