"We think this is really great, and we have done tests to show that this underwear is nice to wear. That is of course very important for soldiers in the field," Simen Rudi from the Norwegian armed forces' logistics division told Norway's VG newspaper.
The new order, which should amount to some 50,000 undergarments every year will come as a big challenge to the company.
"We have a pretty good capacity, so we can do it," Camilla Køhler from Frøya Trøya.
The company, which launched in 1981 and has supplied military garments in the past, decided to go exclusively organic in 2009.
Maiken Pollestad Sele of Oikos, which promotes organic textiles, said the army's move towards environmentally friendly clothing was a big step forward.
"This is fantastic! When the military buys organic cotton, there will be fewer pollutants in the environment where the cotton and garments are made," she told VG. "I think that by doing this, the military is really taking responsibility."
Rudi conceded that the decision to go organic would increase costs.
"Organic products and things which help the environment are of course more expensive, but we are not talking about many kroner per unit," he said.