LONDON, Jan. 21 (Reuters) - Britain's Ministry of Defence said on Sunday it would spend 405 million pounds ($514 million) to upgrade a missile system now being used by the Royal Navy to shoot down hostile drones over the Red Sea.

The Sea Viper Air Defence system will be upgraded with missiles featuring a new warhead and software enabling it to counter ballistic missile threats, the MoD said in a statement.

The contracts were awarded to the British division of MBDA, a missiles joint venture owned by Airbus (AIR.PA), opens new tab, BAE Systems (BAES.L), opens new tab and Leonardo (LDOF.MI), opens new tab, the MoD said.

"As the situation in the Middle East worsens, it is vital that we adapt to keep the UK, our allies and partners safe," defence minister Grant Shapps said in the statement.

"Sea Viper has been at the forefront of this, being the Navy's weapon of choice in the first shooting down of an aerial threat in more than 30 years."

U.S. and British naval forces in the Red Sea have shot drones and missiles fired by Yemen's Houthi movement this month as the conflict between Israel and Hamas spilled out into the broader region.

Photo from Reuters