The Cabinet Office is to conduct a new assessment of alternatives to Britain's Trident nuclear deterrent in a fresh concession to the Liberal Democrats, it was announced.

Defence Secretary Liam Fox said the design of a new generation of missile-carrying submarines, together with £3 billion of initial contracts, had been agreed ahead of the final decision on replacing the existing fleet due in 2016.

However he told the House of Commons that while he still believed that a submarine-based ballistic missile system remained the most effective deterrent, he had agreed that officials should look at the alternatives.

"The coalition agreement reflected both parties' commitments to a minimum credible nuclear deterrent, but also the desire for the Liberal Democrats to make the case for alternatives," he said.

"To assist the Liberal Democrats in making their case for alternatives I am also announcing today the initiation of a study to review the costs, feasibility and credibility of alternative systems and postures."

He said that the study would be carried out by officials in the Cabinet Office under the supervision of the Lib Dem armed forces minister Nick Harvey.

The move marks a further concession to the Lib Dems who have already succeeded in putting back the "main gate" decision on placing the final order for the submarines to 2016, after the next general election.

Dr Fox said he remained convinced that only a like-for-like replacement for Trident could provide a credible deterrent.

"If we want to see a minimum credible nuclear deterrent for the United Kingdom, the system that will be provided by the replacement Trident system is the best and in fact the only credible one," he said.

Dr Fox said the decision to order "long lead" items would ensure that the first of the four replacement submarines would enter service in 2028 as planned.