More than £1.1 billion will be pumped into upgrading accommodation and facilities for the Armed Forces.
Defence secretary Michael Fallon made the announcement during a defence Select Committee hearing on the delivery of the strategic defence and security review.
“Our armed forces deserve facilities and housing that match the need of this generation,” said Mr Fallon.
“We’re committed to delivering a better defence estate; ensuring our Armed Forces are properly supported and provided for. With our defence budget secure and rising until 2020, we will can now properly invest in our soldiers, their families and communities.”
The 25-year contract with Aspire Defence Limited is part of the Project Allenby Connaught initiative and will create 200 jobs in south-west England.
Apprenticeships with local colleges will also be set up with the Ministry of Defence (MOD), which is the UK’s single largest apprentice employer.
The investment will see new and modern single living accommodation on Salisbury Plain and in Aldershot, capable of sleeping up to 2,600 people.
New office, catering, retail and leisure facilities will also be built to provide soldiers with the best possible environment in which to live and work.
Construction is expected to be completed by 2020, which means all British Army units based in Germany can return to the UK, saving up to £240 million a year by 2022/23.
Major general Alastair Dickinson, the Army’s director of basing and infrastructure and MOD lead for the programme, said the investment will deliver first-class basing facilities and provide a high level of support and service.
Allan Thomson, chief executive of Aspire Defence Ltd, added: “[We are] extremely proud of our successful record delivering first-rate living and working accommodation for soldiers.
“We are delighted to be embarking on this next phase of development, expanding our provision of high-quality purpose-built accommodation and a best-in-class total facilities management service at garrisons across Salisbury Plain and at Aldershot.”