A decision has not yet been taken on whether to replace the Trident nuclear weapons system, Lord Drayson has said.
But the defence minister promised a "preferred option" in a white paper to come by the end of the year.
CND and Greenpeace claim increased activity at the Aldermaston research site show a new nuclear weapons programme is already under way.
But Lord Drayson told MPs investment at Aldermaston was mainly about ensuring existing weapons were safe.
Tony Blair is thought to favour replacing Trident but has promised a full debate before a decision is made.
Chancellor Gordon Brown has also said he wants to keep Britain's "independent nuclear deterrent".
'Misunderstanding'
But disarmament campaigners say the estimated £25bn needed to replace Trident would be better spent on improving public services and boosting pensions.
MPs have been promised a "veto" on replacing Trident - after a full public debate - by Commons leader Jack Straw.
TRIDENT MISSILE SYSTEM
But CND chair Kate Hudson told the Commons defence committee activity at Aldermaston "suggests the decision to go ahead with a new generation of nuclear weapons has already been taken".
Building work, costing £1bn, at the Atomic Weapons Establishment at Aldermaston - and the creation of hundreds of new jobs - have sparked claims of new nuclear developments.
'Defence need'
Greenpeace has said the international Nuclear Non-proliferation Treaty is being contravened.
But Lord Drayson said such claims were based on a "misunderstanding of what the investments made at Aldermaston have been for".
He told MPs: "They are to ensure that the existing deterrent can be maintained in a safe and effective form."
But he conceded the equipment being purchased could also be used to design a new nuclear warhead in the future, "should it be required".
He also hit back at a claim by Dr Dominick Jenkins, of Greenpeace, that the government was indulging in "Alice in Wonderland" politics by having a debate after it had made the decision.
"Absolutely no decision has yet been taken," Lord Drayson told MPs, although, he said, the white paper would include the government's "preferred option".
He said Gordon Brown's backing for the nuclear deterrent was based on a Labour manifesto commitment.
Among other issues, the white paper would discuss whether to replace the current submarine-based missiles with a land-based or aircraft-based system, said Lord Drayson.
He said the "defence need" was the main consideration when it came to replacing Trident, rather than the impact on jobs or maintaining the skills base to build nuclear submarines.
But he said if Trident was going to be replaced the decision would have to be taken "next year" to maintain a continuous deterrent and avoid a gap between the end of one system and the introduction of another.
'Insurance policy'
Speaking ahead of the committee hearings, Labour MP Kevan Jones told the BBC that the MPs could recommend overhauling, rather than replacing, the submarine fleet carrying the US-made Trident missiles in their final report.
"The Americans have got a programme at the moment extending the life of their submarines up to 2042," he said.
That meant the US does not have to take a decision on their replacement system until the mid-2020s.
"The other thing I am a bit concerned about, it's going to be very expensive if we are going to do something different," Mr Jones added.
The Conservatives are in favour of maintaining Britain as a nuclear power.
Former foreign secretary Sir Malcolm Rifkind told BBC Radio 4's Today programme nuclear weapons were needed as an "insurance policy".
"In the last 10 years, India, Pakistan, possibly North Korea, possibly Iran, and other countries, have acquired nuclear weapons. This is a pretty dumb time to be going in the opposite direction," said Sir Malcolm.
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