The deal, with US firm Boeing, will bring the total force of Chinooks to 60 - the biggest capability in Europe.
Announcing the deal at RAF Odiham, in Hampshire, Defence Secretary Liam Fox said the government was "committed to delivering a top-class equipment programme that is properly funded".
Dr Fox also met personnel that had recently returned from Afghanistan.
Continue reading the main story Aircrew: 4Max speed: 185mph [298 km/h]Length: 51ft [15.5m]Rotor span: 60ft [18.3m]Weight: 50,000lbs [22,680kg] maxRange: About 300 milesSources: Boeing, RAF, GlobalSecurity.org
The Chinook is vital to Nato operations in Afghanistan, offering support to both British and other nations' forces.It has room for 54 troops or can carry at least 25,000lb (11,340kg) of freight.
The £1bn contract includes development, building and five years of support.
Dr Fox said the government deal had brought "reality" to the defence budget, which could now deliver real equipment.
The MoD has been trying to balance the books since last October's strategic defence and security review (SDSR).
The SDSR saw the cancellation of equipment including Nimrod MRA4 reconnaissance planes and the early withdrawal of HMS Ark Royal and Harrier jump-jets.
'Massive step up'Earlier this month, 30 US troops died in Afghanistan when their Chinook helicopter was downed by a rocket-propelled grenade. It was the deadliest incident of the 10-year war.
Aviation expert Paul Eden said helicopters tended to be more at risk from small arms and rocket-propelled grenades, as they were flown closer to the ground than planes.
Liam Fox: "We went into Iraq with too few helicopters... we can't allow that to happen in the future"He said Chinooks were not any more at risk from conventional weapons than other types of helicopters, but that some adversaries would regard bringing down a Chinook as the "ultimate" result, due to the aircraft's size.
"People go out of their way to shoot one down," he said.
A spokeswoman from Boeing also said Chinooks were no more at risk from conventional weaponry than other helicopters.
She added that the aircraft had an all-digital cockpit which increased their "situational awareness" so that they could see "more of what might be coming at them".
Mr Eden said the Chinooks were armoured in crucial areas and carried infrared technology that allowed them to see missiles being launched and counter them.
But he said it was harder to evade grenades or simple bullets: "The bullet moves very fast - by the time they've noticed it's been fired they basically could have been hit".
He said pilots had to fly tactically to avoid such weaponry, and Chinooks would often be escorted by aircraft with more firepower, such as Apaches.
Mr Eden said Chinooks were valued for their power, which allowed them to be effective in high altitudes.
He said the CH-47F model ordered by the RAF was "a massive step up in capability".
"In effect it's almost a new helicopter."
The air force also planned to bring some of its older-model Chinooks up to the same capability, meaning it would end up with a "super, super-capable fleet", he said.
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