The news came as prime minister Tony Blair this week placed Britain on a state of heightened alert and ordered the army on to the streets of London to protect the capital from attacks from terrorist groups with links to al-Qaeda.
The Foreign Office has awarded a contract, understood to be worth more than £10m, to building services consultant Serco Defence to oversee the refurbishment work.
Serco has instructed construction labour agency Audax IT to recruit electricians and to undertake a 16-week government security check of the workers as the first part of the contract.
A government insider said more than 200 embassies would have their security upgraded as part of the contract.
He said the details of the work to be carried out remained strictly confidential for security reasons, but added that it included the installation of specialist equipment, such as retina scanning machines and fingerprinting access.
The source told Building: "The embassies are also undergoing refurbishment by builders, but this work is being carried out by specialist in-house teams of workmen from the Foreign and Commonwealth Office."
According to the insider, the Serco contract includes a provision to upgrade and install the security equipment at new-build embassies.
Refurbishment work is being carried out by specialist teams of FCO workmen Government insider
He said the electricians had been recruited from the construction industry and telecommunications firms such as Marconi.
It is understood that any workmen involved in the contract would need to have a security vetting rating called "direct vetting", which is overseen at ministerial level.
Internal communication between Serco and Audax, which has been seen by Building, said the contract is seen as a milestone for the Foreign Office, as it is the first time a large commercial contractor has been used for a high-profile security contract.
The communication said: "These resources will increase the Foreign and Commonwealth Office's capabilities of carrying out security enhancements to designated Foreign and Commonwealth missions across the world."
Audax IT, the Foreign Office and Serco refused to comment.
Building revealed last week that the government had ordered contractors to employ only workers with five years' continuous employment on airport and port schemes.
More than 450 army troops were deployed to Heathrow airport on Tuesday, as it emerged that the airport could be targeted in any attack.