The contract will fund upgrades on the missile systems, high-speed comms links and defensive improvements.
A stalwart of the UK’s military air capability, the new systems are designed to maintain the plane’s combat competitiveness until the middle of the century.
BAE is developing a new fighter, the Tempest, to replace the Typhoon but this will need a GBP25bn commitment from the government to get underway.
The weapons company employs 34,000 staff n the UK of which around 5,000 are employed on the Typhoon, with a further 10,000 people employed supplying parts for the jet fighter.
Shares were unchanged at 576.4p.