Mr Hammond said: "The Government's position on this is very clear. We are committed to maintaining a continuous deterrent, based on the Trident missile.
"There was a vote in Parliament in 2007 where there was an overwhelming majority for replacing the Vanguard submarines when they go out of service (in the 2020s).
"We have agreed with our Liberal Democrat coalition partners that we will look with them at whether there is any alternative which makes economic sense and provides an as-good nuclear deterrent capability.
"That report will be completed later this year or early next and it will inform the main investment decision in 2016.
"But in the meantime, we are pressing ahead with the design and development work."
The UK Government has no plans to remove nuclear weapons from Faslane and intends to move more submarines based in England to the base, he said.
"We are committed to moving the submarines that are currently based down in Devonport up here over the next few years, increasing employment at this base and contributing even more to the local economy," he said.
"Right now there are 3,200 civilian jobs on this base, as well as many thousands of military jobs, and that number will increase as we go through the decade and the remaining submarine operations are brought up here."
The SNP and the Campaign for Nuclear Disarmament insist that Trident supports only 520 jobs, but Mr Hammond said this "relates simply to one part of the facility here for weapons handling".
Moving Astute and Trafalgar-class attack submarines there will create 1,500 "essentially new jobs" which will move to Scotland from the facilities where they are based, he said.
"The strategic nuclear deterrent is a vitally important part of our defence," Mr Hammond said.
"It is the ultimate guarantee of our independence and our freedom. It costs us overall, year-on-year, about 6% of the total defence budget and that buys us the ultimate guarantee."
Scottish Deputy First Minister Nicola Sturgeon attacked the UK Government for "dumping" weapons of mass destruction on Scotland, and said there is cross-party support for scrapping the renewal of Trident in the Scottish Parliament.
"The vast amount of taxpayers' cash squandered by the UK Government on designing the new Trident system during a period of austerity and cuts to services and benefits by the Tory-led coalition is a staggering waste of money," she said.
"The obscene amount ploughed into upgrading and maintaining Trident illustrates the independence dividend, and how with the powers of an independent Parliament we could spend Scotland's share of Trident spending on key public services.
"The Scottish Parliament has voted clearly, across parties, against Trident renewal and most Scots want the Parliament to have the powers to get rid of Trident."