Defense Minister said, "We have 10 aircraft that still have some life in them, but we need to think ahead."
"We're planning to buy 20 aircraft that will double our current fleet," Fallon told Reuters in an interview at the Reagan National Defense Forum in southern California. "We have 10 aircraft that still have some life in them, but we need to think ahead."
Fallon gave no details on the expected cost of the new drones. The contract announced Saturday is for development work, not the cost of producing the 20 planes.
He said the new aircraft, a modified version of the Predator aircraft, to be called Protector in Britain, would form a vital part of Britain's security network and would be used in Britain's fight against the Islamic State militant group.
The spending was part of a push by Britain to increase defense spending for the first time in years, according to Fallon. The new aircraft would substantially enhance Britain's intelligence gathering capabilities and the firepower of the Royal Air Force.
Fallon underscored Britain's commitment to NATO and European security despite its vote to leave the European Union in June.
Each of the new drones is to be armed with UK-made Brimstone 2 missiles and Paveway IV laser-guided bombs.
The next-generation drones will offer improved range and endurance, greater weapons capacity, automated take-off and landing and better resilience against the elements, the UK ministry said.