The replacement for the Royal Yacht Britannia will "pay for itself many, many times over", Matt Hancock has said.
The Health Secretary’s comments came as the ship’s official historian said it could generate billions for the UK in trade deals.
Mr Hancock stepped in to defend the project after the former Tory chancellor Lord Clarke described plans for a new national flagship as a "complete waste of time".
The Health Secretary told the BBC: "The amount of investment that you can get in from the rest of the world by showing the best of Britain in harbours the world over is very, very significant.
"And I think we should be getting out there and trading with the world, and so I think that a Royal Yacht is a great idea and I’m very positive about it, because I think it will more than pay for itself many, many times over."
It came after Lord Clarke of Nottingham, who as Ken Clarke was the Chancellor in John Major’s government, described the plans as "complete waste of time, silly populist nonsense".
He said: "It’s a symptom, £200 million is not going to cause problems, but it shows there are people in Number 10 who just think there’s free money and who think that waving a Union Jack and sending yachts and aircraft carriers around the world shows what a great power we are. We have no money for that kind of thing."
Richard Johnston-Bryden, who wrote a 2003 history of the ship, said a replacement could bring in billions of pounds of trade deals for the UK
Credit: Charles Dharapak/ AP
But Richard Johnston-Bryden, who wrote a 2003 history of the ship, said a replacement could bring in billions of pounds of trade deals for the UK. He pointed to how, in 1993, Britannia was the venue for the signing of deals with Indian companies worth £1.5 billion when it was moored off Mumbai.
He told The Telegraph: "There is no reason why a true replacement for HMY Britannia could not have the same impact in the support of the Government’s initiatives to promote the UK’s business interests on the international stage as a key part of its overall strategy.
"Britannia was a unique facilitator which enabled the organisers of the trade events held on board to attract the world’s most influential politicians and business leaders. No other initiative was able to attract the same calibre of audience and provided the Government and UK companies with a significant advantage over their rivals.
"Britannia also had the ability to act as a focal point for the signing of contracts that would have otherwise dragged on for years or never been signed."
Mr Johnston-Bryden said "a prime example of this attribute occurred in November 1993 when £1.5 billion of contracts were signed in the presence of the British Foreign Secretary, Douglas Hurd, and his Indian counterpart during a sea day held in Britannia".
He added: "Lord Hurd told me during the research for Britannia’s official history that the negotiation process for many of these contracts would have dragged on for several years, while some of them would never have been signed without the deadline imposed by Britannia’s visit."