The Ministry of Defence has short listed seven trusts in a competition to develop a national centre for defence medicine.
The teaching hospitals will compete for the multi-million pound investment, which will replace the UK's last remaining forces' hospital, Royal Hospital, Haslar, which is scheduled to close by 2002.
The trusts were chosen from 18 that submitted initial proposals. An MoD spokesperson said the final choice would be made 'around the end of the year'.
The seven contenders are Guy's and St Thomas' Hospital trust, Leeds Teaching Hospitals trust, North Bristol trust, Oxford Radcliffe Hospitals trust, Lothian University Hospitals trust, Newcastle upon Tyne Hospitals trust and University Hospitals Birmingham trust.
The MoD refused to confirm the exact level of investment planned. A spokesperson said announcing 'what we are prepared to spend will take away some of our bargaining power'.