Demonstrators staged a massive protest outside Number 10 Downing Street during the Prince's visit over both countries' role in Yemen in a war which has killed an estimated 10,000 people.
"The Crown Prince's visit has opened a new chapter in our two countries' historic relationship", British Defence Secretary Gavin Williamson said.
The Crown Prince also inspected a number of BAE Systems' products and the contribution of Saudi companies working in the military field and he was briefed on the company's future plans to further transfer and localize technology, train and employ Saudi citizens. Britain credits Saudi intelligence sharing with saving British lives and has licensed billions of pounds of weapons and ammunition sales to Saudi Arabia.
Mrs May defended the UK's ties with Saudi Arabia earlier this week, saying all arms sales are strictly regulated.
BAE confirmed the news in a statement, saying: "This is a positive step towards agreeing a contract for our valued partner".
Friday's blockbuster announcement follows long-running discussions with Saudi Arabia, which already has a total of 72 Eurofighter Typhoon planes in its fleet.
Mr Watkins criticised the welcome given to the crown prince, saying that in Yemen the Saudis were "orchestrating what will potentially become the worst starvation in the last 50 years".
But, in Riyadh, images of the 32-year old Saudi meeting the Christian cross-wearing head of the Anglican church on Thursday dominated newspapers, with headlines citing it as an example of the conservative kingdom's more tolerant approach to religion.
"The fact that you can rape, murder, kidnap, bomb schools, bomb clinics with no outcome, speaks I think to the heart of the deeper challenge that we are addressing today".
Before his visit, the 32-year-old Crown Prince Mohammed bin Salman had emphasised the importance of the relationship between the United Kingdom and Saudi Arabia regarding security.
But she has also raised concerns about the humanitarian crisis in Yemen with the Crown Prince during his visit.