The ground-breaking agreement comes in addition to a £500 million 10-year 'white fleet' contract awarded to Lex Defence in 2001 for 9,000 'non-combat' vehicles in a record-breaking contract.
The latest deal will see the company supply the Royal Air Force with 3,300 specialised vehicles, including cars and vans, over an eight-year period.
The total contract brings the permanent fleet size to more than 12,500 vehicles for the Army, Royal Air Force, Royal Navy and other MoD customers throughout Britain and includes the supply of more than 250,000 days of short-term rental per year.
Colonel David Ruff, leader of the Defence Logistics Organisation team that awarded the contract said: 'This expansion of the contract is testament to the strength of the partnership which has been formed between the MoD and Lex Defence.'
Lex Defence managing director Brian Grant added: 'We are absolutely delighted with the news that our existing contract has been expanded. This is worth a great deal to us, not just in financial terms, but because it proves the success of our partnering relationship with the MoD.'
Lex Defence brings together specialist areas from within parent RAC Group, including Lex Defence White Fleet, Lex Multipart Defence, Lex Transfleet, Lex Vehicle Leasing, Lex Fleetserve, BSM, RAC, RAC AutoWindscreens and RAC Software Solutions.
It is a unique service provider to the British armed forces and is currently responsible for more than £1 billion worth of MoD contracts, supporting its fleet anywhere in the world.