A new “national flagship” to succeed the Royal Yacht Britannia could cost as much as £250 million, the Defence Secretary has said.

Ben Wallace said the costs of the “floating embassy” could be a £50 million increase on previously reported estimates.

Labour has criticised the “absolutely staggering” cost of the project, calling on the Government to instead “invest wisely” to tackle crime and antisocial behaviour.

The vessel is due to be paid for out of the Ministry of Defence (MoD) budget, even though No 10 has confirmed the ship will be for trade rather than defence purposes.

In a national flagship engagement day speech on Wednesday in Greenwich, Mr Wallace said: “There has been a lot of reporting around this ship.

“Not all of it accurate.

“So let me set out our basic aims.

“Subject to working through bids, competition and technology, I aim to commission the ship for between £200 and £250 million on a firm price.

“The competition will run until the end of October.

“I hope to announce the winners in December.

“To begin construction in a British shipyard as early as next year and have a ship in the water by 2024 or 2025.

“That’s an ambitious timescale but this is an ambitious project, the chance to break the mould and break some records to get things done in the national interest.”

The Defence Secretary said some the Government’s ambition for the ship was for it to be a “floating embassy”, which was made and designed through a “prestigious showcase for UK skills and expertise”, and was also the “greenest ship of its kind”.

The Prime Minister was asked about the “Royal Yacht” in an interview with LBC’s Nick Ferrari on Wednesday morning, and described it as “somewhere where the UK can show itself off to the world”.

Boris Johnson told LBC: “On the national flagship, as I prefer to, to call it.

“It is a project that will not only help to drive, revive the ship building industry in this country, drive immediate jobs and growth for young people, immediate job opportunities for young people in a sector in which this country used to lead the world.

“But when you consider the opportunity for the UK, as we compete now for inward investment in the UK, we need a forum, a place where the best of British business and industry can come together to showcase what we have to offer, and, you know what I mean by, by MIPIM, the world trade fairs, the expos.

“We need somewhere where the UK can show itself off to the world and attract investment and that will drive jobs and growth in the UK, not just in shipbuilding but across every sector of the UK.”

In response to the £250 million price tag for the vessel estimated by the Defence Secretary, Labour’s shadow home secretary Nick Thomas-Symonds said: “Boris Johnson has lost control of his vanity yacht.”

He added it was “absolutely staggering” that costs for the project had “rocketed” by what he claimed was an additional £100 million, citing a £150 million cost reported in The Telegraph last week.

Mr Thomas-Symonds also said: “Labour would scrap the Government’s latest pet project and invest taxpayers’ money wisely to tackle crime and the surge in antisocial behaviour under this Conservative government.”

The Defence Secretary justified the cost of the new flagship to MPs on the Commons Defence Committee in June, saying the estimated price tag was less than 0.1% of the £13bn defence budget for shipbuilding over the next 10 years.

The boat will be the first national flagship since Britannia, which was decommissioned in 1997, but the new vessel will be a ship rather than a luxury yacht and is aimed at boosting the Prime Minister’s post-Brexit vision of the UK as a global trading nation.

The ship will be crewed by the Royal Navy and is expected to be in service for around 30 years.