The $1.3 billion contract will see 1100 Hawkei vehicles and 1000 trailers roll off the production line at Bendigo. 

Defence Minister Marise Payne said the Hawkei had strong export potential.

"It will be very attractive on the international market, so let's hope that as we move into effective production we can engage internationally on that as well," she said. 

The big brother to the Hawkei, the Bendigo-built Bushmaster, is currently in service in the Netherlands and Britain. Thales global chief executive Patrice Caine said the Hawkei was already attracting overseas interest.

"We have already triggered many commercial pursuits, particularly in Europe and not only, to market this vehicle upstream, even before the signature of this contract," Mr Caine said.

Prime Minister Malcolm Turnbull said the seven tonne Hawkei would protect the lives of defence personnel from roadside bombs.

 "The reality is that IED's [roadside bombs] are a feature of the modern battlefield and regardless of the context in which the ADF is operating, that type of threat is almost certainly going to be there and these vehicles are able to operate in every terrain,” he said.

“It is a time of rapid change and whether you are responding to violent extremism or the increasing lethality of individuals on the battle field and that is what the Hawkei is a response to you need to be prepared to change and adapt to take on your opponents.”

The decision brings to an end a months-long nervous wait for the company’s staff at its Bendigo manufacturing plant.

Member for Bendigo Lisa Chesters said at a time when some other defence manufacturing contracts were in danger of being lost to overseas companies, it was “fantastic” to lock in the jobs in Bendigo. 

“These are good Australian jobs; high-tech manufacturing jobs that should be in this country. Again we’ve proven we’re the world’s best at producing defence vehicles and let’s hope it’s the first of many contracts to come,” she said. 

Member for Bendigo East Jacinta Allan said the win was well deserved by Bendigo Thales workers. 

“Credit should go to the Bendigo workers who clearly have demonstrated they have the superior skills and expertise to manufacture such a high quality product that will be going into the Australian Defence Force,” she said.

“It’s hard to overstate the importance of this decision because it secures hundreds of jobs in our region and it demonstrates what can be achieved when a government makes purchasing decisions that benefit local communities like this.” 

Labor leader Bill Shorten said "big defence contracts" should stay in Australia.

"We want make sure that we have the best quality equipment for our service people, but we want to make sure that — all things being equal — the money gets spent in Australia,” he said.

Thales Australia chief executive officer Chris Jenkins said the company was proud to supply the defence force with the next generation of protected vehicles. 

“This is a great day for the ADF and for Australian industry,” he said. 

“Hawkei is a highly capable vehicle that will serve this country well for many years to come, and we are delighted that the Department of Defence has recognised the importance of this vehicle by reaching this milestone.”

Mayor Peter Cox said the flow-on effects of the Hawkei contract would be felt in Bendigo years after production of the vehicles has ceased.

“It shores up our manufacturing sector and it further diversifies our economy, with manufacturing playing an important part,” he said.

“This produces full-time jobs and often those jobs have spin-offs in other industries. Not only will Bendigo benefit here but Victoria will benefit.”

Cr Cox said the export potential and maintenance demands of the Hawkei would keep the defence manufacturing sector in Bendigo humming for years to come after the three-and-a-half-year build period. 

“Of course this is only the first contract. Once [the Hawkei] demonstrates its success through the ADF, other countries will be looking at it also and there will be more opportunities hopefully,” he said.

Production of the vehicles will begin in mid-2017, with the first deliveries expected towards the end of that year.