The move will make sure part of the new A350 XWB passenger aircraft is built in Britain.
And it will secure 1,200 jobs at the firm's plants in Filton, Bristol and Broughton in North Wales, according to Business Secretary Lord Mandelson.
The financial support will also mean that an extra 5,000 jobs across the supply chain in the UK are safeguarded.
Airbus has been looking for loans from European governments to help pay for the £9.5bn project in exchange for work to be shared out around the continent.
Germany will provide £950m and France £1.2bn, officials have said.
The system is fiercely opposed by the United States and American arch-rival Boeing, who say the loans are being given on favourable terms.

Source:- http://blogs.news.sky.com/