Robert Gates, US defence secretary, unveiled a sweeping overhaul of defence priorities on Monday, taking an axe to several high-profile weapons programmes as part of his spending proposals.

Mr Gates said the Pentagon would place more emphasis on “irregular” warfare as he outlined a series of cuts and changes as part of President Barack Obama’s $534bn defence budget.

“We must rebalance this department’s programmes in order to institutionalise and finance our capabilities to fight the wars we are in today and the scenarios we are most likely to face,” he said.

While Congress will try to alter some of the plans, Mr Gates proposed dramatic changes, including cancelling a deal to build a presidential helicopter. Lockheed’s VH-71 helicopter programme, based on a design by AgustaWestland, the UK subsidiary of Italy’s Finmeccanica, has seen its costs soar since the companies won an initial contract in January 2005.

The initial contract, worth $3.8bn, was for nine helicopters, of which seven have already been delivered. Mr Obama signalled this year that the contract was in danger when he said it had “gone amok”.

Mr Gates also proposed ending production of the F-22 Raptor fighter jet at 187 aircraft. While that would affect Lockheed Martin, the company would benefit from a separate proposal to increase production next year of the F-35 Lightning II fighter jet, which will also be bought by US allies, including the UK.

The Pentagon chief also ordered major cuts in missile defence systems, while restructuring the overall programme to focus on missile threats posed by “rogue” states such as North Korea. Pyongyang this weekend fired a long-range rocket over Japan in a failed satellite launch.

Shares in the major defence contractors gained after the announcement. Analysts said investors saw the news as positive because it had put an end to months of uncertainty. Lockheed Martin and Northrop Grumman both saw gains of about nine per cent.