The Army said Friday it is canceling development of the FOG-M missile designed to destroy tanks and helicopters, a program that could have meant up to $2 billion in contracts for General Motors Corp. and Boeing Co.

The service said in a brief announcement that costs of the fiber optic guided missile (FOG-M) have risen sharply and that it is unwilling to tolerate the increasing bill with lower defense budgets over the horizon.The missile has been under development for about two years.