Britain is set to establish its first permanent military base in the Middle East after it withdrew from the region in 1971, a report said.
The new military base will host larger ships including destroyers and aircraft carriers, reported The Guardian.
Bahrain will contribute most of the 15 million pounds required to build the base while, Britain will bear the ongoing costs.
The report said that the rise of the Islamic State (IS), fears over Iran and the continuing instability in the region prompted the British government to establish a new naval base, which is close to a more substantial U.S. facility, home to the fifth fleet.
British Foreign Secretary Philip Hammond, who signed the deal at a security conference in Manama, Bahrain, said that the deal signified Britain's "growing partnership with Gulf partners to tackle shared strategic and regional threats."
Chief of the defence staff, General Sir Nicholas Houghton, termed the deal "symbolic" of Britain's interests in the stability of the region. The fact that the Bahraini authorities and government agreed to fund the facility indicated the "quality of the relationship" that it shares with the United Kingdom.
Bahrain's foreign minister Sheikh Khalid bin Ahmed bin Mohammed Al-Khalifa said that the new deal underlined Bahrain's commitment to work with the U.K. and other nations to address regional security threats.
Human rights group including, Human Rights Watch, have criticised Bahrain's human rights record. However, Britain, the U.S. and Saudi Arabia have supported the government despite widespread protests in March 2011.
