Military officials say the need for the launcher has become increasingly pressing as British troops face the insurgency in Iraq. Currently infantrymen must often call in air-strikes against snipers holed up in buildings within residential areas. But such strikes risk civilian casualties and depend on close air cover being available.

The procurement of the so-called anti-structure weapons is to be officially announced in Parliament tomorrow by the defence procurement minister, Lord Drayson.

It is understood the contract for the new system, worth around £50m, is to be awarded to a consortium led by the Dynamit Nobel defence firm. The new weapon will be around 3ft long, weigh less than 20lb but be capable of accurately firing wall-busting grenades from hundreds of yards.

It is likely to be adapted from the existing Panzerfaust tank-buster that is capable of puncturing steel to a depth of three feet. Crucially, the new weapon can be fired from within enclosed spaces, reducing the risk to the user.

Defence officials deny the new shoulder-fired weapon will be used to fire so-called thermobaric munitions. Such shells release a cloud of inflammable explosive particles which is then detonated. The resulting shock wave and vacuum pressure destroy internal organs. Such is their power they are thought to be in contravention of the Geneva Convention.

Hand-held thermobaric devices were used in Afghanistan by the Russians. The grenade of a Russian RPO70 Schmel, known to the guerrillas as "Satan Sticks" were used against hideouts in caves and tunnels.

The US military experimented with the use of thermobaric rounds in the assault on the Iraqi city of Fallujah last year. An internal US Marine report stated that the munition created "a shockwave of unparalleled destructive power".

"One unit disintegrated a large, one-storey masonry-type building with one round from 100 metres. They were extremely impressed." The weapons were designed by a US naval research centre in Maryland and rushed into service last year. The Marine Corps Gazette reported that "gunners became expert at determining which wall to shoot to cause the roof to collapse and crush the insurgents fortified inside interior rooms".

It added: "We found that our assaultmen had first to fire a dual-purpose, high-explosive rocket in order to create a hole in the wall or building. This blast was immediately followed by a thermobaric round that would incinerate the target or literally level the structure."

However a senior military official told the IoS last night: "The new capability will be a blast weapon not a thermobaric weapon."

The new weapon is not likely to come in time to support infantry operations for some time to come, however. The minister will say that the Ministry of Defence hopes to take delivery of the new system in 2009.