Each of the first batch of ships will cost no more than 250 million pounds and will be built in Britain, the government said.
The Royal Navy will buy at least five budget frigates under a plan being announced today that aims to inject competition into Britain's warship-building market, which is dominated by BAE Systems.
The first version of the "stripped down" model - yet to be designed or fully-costed - is due to be commissioned into the navy within six years.
The plans form part of a new national shipbuilding strategy which accepts the recommendations of an independent report into the industry by Sir John Parker, the chairman of mining giant Anglo American.
The new approach is "designed to maximise exports and be attractive to navies around the world", Defence Secretary Michael Fallon said in the release, adding that while the Type 31e will be created to meet British needs, it will have the export market "in mind from the beginning".
"Backed up by a commitment to spend billions on new ships, our plan will help boost jobs, skills, and growth in shipyards and the supply chain across the United Kingdom".
Now the ideas put forward by the industrialist have won the support of Defense Secretary Michael Fallon, who is anxious to deliver budget vessels to the British military, but within strict budgetary restraints. In line with standing United Kingdom policy on warships they will be built in the UK.
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This modular construction process was used on the UK Navy's two new aircraft carriers, HMS Queen Elizabeth and HMS Prince of Wales.
Britain is presently trying to sell the Type 26 to various foreign governments, including Australia and India, although no orders have, so far, been placed.
"My recommendations will change the shape of naval shipbuilding over the country in the future".
The commitment to build the Type 31e comes ahead of next week's Defence and Security Equipment International exhibition in London, which will see a "real push" for maritime sales, according to Stephen Phipson, the outgoing head of arms exports at the International Trade Department.
Babcock International said in a statement: "We welcome the United Kingdom government's announcement on the national shipbuilding strategy and the potential opportunities this could create for Babcock and the wider United Kingdom supply chain".
Sir John Parker's independent report into British naval shipbuilding proposed far-reaching recommendations to transform the United Kingdom maritime industry and boost the prosperity of regions, shipyards and maritime supply chains across the country.