Rishi Sunak today scuppered Boris Johnson’s replacement for the Royal Yacht Britannia.
Defence Secretary Ben Wallace told MPs he was torpedoing the plan for a National Flagship “with immediate effect”.
The move comes as Chancellor Jeremy Hunt prepares to announce billions of pounds of spending cuts and tax rises at the Autumn Statement on November 17.
Critics had said the £250million vessel was a vanity project by the former Prime Minister.
The ship had been seen as a replacement for Britannia, which was retired from the Navy in 1997.
Ministers hoped to have the National Flagship in the water by 2024 or 2025.
Announcing the project in May last year, Mr Johnson claimed: “Every aspect of the ship, from its build to the businesses it showcases on board, will represent and promote the best of British – a clear and powerful symbol of our commitment to be an active player on the world stage.”
But today Mr Wallace scrapped the plan, telling MPs he was going to spend the money on a new spy ship instead.
He had announced the plan for another multi-role ocean surveillance ship at the Tory Party conference last month.
Speaking at Defence Questions, the Cabinet Minister said: "I wish to announce to the House the decision to accelerate the procurement of the multi-role ocean surveillance ships, the MROSS.
“In the face of the Russian illegal and unprovoked invasion of Ukraine and (Vladimir) Putin's reckless disregard of international arrangements designed to keep world order, it is right that we prioritise delivering capabilities which safeguard our national infrastructure.”
The ships will monitor suspicious activity close to vital links placed on the seabed connecting the UK to other countries.
The fibre optic cables carry vast amounts of high speed data - and interfering with them could jeopardise internet connections, email traffic and bank transactions.
British submarines and frigates regularly track Russian ships lurking near cables in the North Atlantic.
The move comes after the Kremlin was accused of attacking the Nord Stream pipelines beneath the Baltic Sea in September, sending methane gas spewing into the water.
Revealing that speeding-up delivery of the spy vessels meant he had to scrap the National Flagship, Mr Wallace said: “I have therefore directed the termination of the National Flagship competition with immediate effect to bring forward the first MROSS ship in its place".
The Commons Defence Select Committee warned last year that there was "no evidence of the advantage to the Royal Navy of acquiring the National Flagship" .
It said the £250m cost, combined with between £20m and £30m a year running costs and providing a crew, would pile extra pressure on the senior service.
John Wood, chief executive of Harland & Wolff, said: “We are proud that the design our team produced was one of the two finalists in a prestigious programme, which would have been a global showcase of the very best of British shipbuilding and engineering and is testament to the skills that exist within Harland & Wolff and our partners.
“The National Flagship programme would have contained cutting-edge design and technology to showcase the UK’s shipbuilding heritage, as well as the outstanding innovation we have in this country which is right now being built into current and future vessels.
“We are certain that had the National Flagship gone ahead, the vessel would have returned many multiples of her build cost to the UK economy over many decades, acting as an international demonstration of the creativity and engineering talent the UK has to offer.”
