The federal government owned shipbuilder ASC is laying off 223 workers in South Australia ahead of the Air Warfare Destroyer project winding down.
The third and final ship, Sydney, is expected to be ready by late 2019.
An ASC spokesman said up to 223 positions would be reduced by early June.
"The company anticipates that the number of people required to leave the business will be reduced due to transfer opportunities to ASC's submarine's business," the spokesman said.
Voluntary and non-voluntary redundancy packages will also be offered.
The company flagged there will be six weeks of talks with its workforce.
The Australian Manufacturing Workers Union says it understands the bulk of the job cuts are permanent full-time and highly skilled positions and has vowed to fight the job cuts.
SA assistant state secretary Peter Bauer said Defence Industry Minister Christopher Pyne had broken a promise to the workers.
"Only a few months ago, minister Pyne was out, with a silver shovel, turning over soil at ASC and saying that the valley of death is over," he told reporters in Adelaide.
"He needs to explain to those workers and to the workers behind me why that statement was made and today we had 197 workers be told that they're going to be leaving the ASC workforce."
Mr Bauer said the union had rung Mr Pyne's office a number of times during the day and was waiting for a response.
After delivering a speech in Canberra on Monday about the rosy future of Australian defence industry, Mr Pyne blamed the previous federal Labor government for the ASC job losses
"The slowdown of work for the ASC is the direct result of Labor's failure to commission a single vessel from an Australian yard," Mr Pyne said.
He pointed out the Osborne shipyard is being built and pylons are being "rammed into the ground".
"Many of (the laid off workers) will walk across the car park and start work on the Osborne South Shipyard and will walk down the road and start work on the (offshore patrol vessels) at the end of the year," Mr Pyne said.
He maintains his government has bridged the "valley of death".
Labor's defence spokesman Richard Marles hit back.
"A competent government would have seen this coming. A caring government would have done something about it," he told AAP.
"This government is neither, and the result is people losing their jobs."
ASC is expected to start work on the first two offshore patrol vessels later this year and hopes to build the Navy's new fleet of frigates.
The Air Warfare Destroyer project has been marred by delays and cost blow-outs.
