* Watchdog criticism prompts defence ministry response
* Global arms market watching Typhoon performance, costs
By Mohammed Abbas
LONDON, April 15 (Reuters) - A British parliamentary watchdog on Friday criticised delays and cost inflation in the production of the new Typhoon fighter jet, prompting the defence ministry to defend the project.
The Eurofighter Typhoon is built by Britain's BAE Systems, Italy's Finmeccanica and European aerospace group EADS, and this week conducted its first combat operation, enforcing a United Nations resolution in Libya.
In a scathing report, the parliament's Committee of Public Accounts, which scrutinises the way government departments spend money but has no regulatory powers, said the Typhoon project was mismanaged, pushing up costs.
"The history of the Typhoon fighter aircraft represents yet another example of over-optimism, bad planning and an unacceptably high bill for the taxpayer," said committee chair Margaret Hodge in a statement.
"The (defence ministry) is now buying 30 percent fewer Typhoon fighter aircraft than originally planned, the cost of the project is now expected to be 3.5 billion pounds ($5.7 billion) more than was originally approved ... the cost of each aircraft has increased by 75 per cent," she added.
The watchdog said the overall project cost had risen to 20.2 billion pounds and that the cost of each plane had risen to 126 million pounds each. The body also said it had taken too long to bring the jet -- conceived in the 1980s -- into service.
Britain is buying 160 of the aircraft, and the accounts committee suggested that support costs for the plane could be higher than originally budgeted.
Global demand for a new generation of fighter jets has surged, and the arms market is likely to be watching the Typhoon's performance in Libya closely, weighing up its advantages against its purchase and running costs.
The defence ministry defended the Typhoon project, and said problems in its production were being resolved.
"The Typhoon is a world beating air-to-air fighter and is fast developing a ground attack capability as is being demonstrated in Libya," Defence Secretary Liam Fox said in a statement.
"I am determined that in the future such projects are properly run from the outset, and I have announced reforms to reduce equipment delays and cost overruns," he added.
British government departments have been under pressure in recent months to slash spending to reduce a national budget deficit, and the defence ministry in particular has been strongly criticised for over-spending in previous years. ($1=.6131 Pound) (Editing by Jon Loades-Carter)