Prime Minister David Cameron has announced plans to spend an extra £2bn on the SAS and other special units over the next five years.
Full video report by ITV News Deputy Political Editor Chris Ship
It is understood the money will be used to fund new weapons and vehicles, protective equipment, night-fighting kit and communications.
In his annual address to the Lord Mayor of London's Banquet, Mr Cameron said: "Britain, France and our allies around the world will never be cowed by terrorism. We will only redouble our resolve to defeat it."
During the speech, Mr Cameron said there have been seven foiled terrorist plots against the UK in the last year.
Six were earlier this year but a Whitehall source told ITV News one of the plots had been foiled this month.
What Mr Cameron said in his speech:
- An extra £2bn to be spent on the SAS and other special units over the next five years
- The extra special forces cash will be delivered from the growth in defence budgets guaranteed by the Government's commitment to spend 2% of GDP on the military for the rest of the decade
- The rising military budget will mean "more money every year" for priorities like unmanned drones, fighter aircraft and cyber-defences
- An increase in the proportion of the overseas air budget devoted to stabilising and supporting broken and fragile states from a target of 30% to 50%
- Plans to back Muslims who support Britain's values "with practical help, with funding, campaigns, protection and political representation"
- 1,900 extra British intelligence staff
Speaking in London's Guildhall, the Prime Minister recalled how Churchill had vowed that "however long and hard the toil may be the British nation would never enter into negotiations with Hitler".
In a nod to comments made by Labour leader Jeremy Corbyn, Mr Cameron said: "Those who say we should have somehow arrested Jihadi John don't get the reality of the world we are in...
"You do not protect people by sitting around and wishing for another world. You have to act in this one. And that means being prepared to use military force where necessary."
He was equally dismissive of critics who questioned his decision to welcome the leaders of countries with dubious human rights records - like China, Egypt and Kazakhstan - to London for official visits.
"You can't conduct foreign policy by press releases and pious statements in Parliament," said the Prime Minister. "You have to engage and build the alliances that can make a difference."
This engagement contributed towards the "soft power" which enabled Britain to "pack a real punch" in influencing the way the world responds to crises, Mr Cameron said.
Focusing more of the Department for International Development's budget on fragile states would "make our aid spending an even more fundamental part of our strategy to keep this country safe (and) help to maintain Britain's position as number one in the world for soft power".
The PM also announced plans to back Muslims who support Britain's values "with practical help, with funding, campaigns, protection and political representation", arguing that the UK "can't stand neutral in this battle of ideas" within Islam.
Dealing with European Muslims radicalised by the "poisonous narrative" of the terror gangs requires a "full spectrum" approach involving military power, counter-terrorism expertise and action to counter extremist ideology, he said.