Philip Hammond has insisted that he is "not looking at reducing manpower" in the Armed Forces ahead of the upcoming Comprehensive Spending Review.
The Defence Secretary his aim is "forces that will be smaller than we've had in the past but better-equipped, more mobile, more capable."
"In the current spending review, all of the work that we're doing is looking at efficiency savings that could be taken," he said.
"We're not looking at reducing manpower; we're not looking at reducing our equipment programme."
David Cameron has sought to play down fears raised by the head of the Army about the impact of further cuts on departments including the Ministry of Defence.
The Prime Minister insisted the UK has the "fourth largest defence budget of any country anywhere in the world" and that a "clear commitment" had been made to their equipment budget, adding that there will be no futher cuts to Forces personnel, other than those already announced.
But he warned that "difficult decisions" are being taken under the Coalition's austerity programme and warned that no department is immune from making savings.
Shadow Treasury Minister Chris Leslie has said it is "totally chaotic" for the government to be conducting treasury negotiations in public.
Mr Leslie insisted that the upcoming spending review should get the economy moving with a "long term plan for jobs and growth".
As a further six government departments agree spending cuts ahead of the Spending Review, big spenders, such has the Department of Work and Pensions and the Ministry of Defence, have yet to come to an agreement.
More than half of Whitehall has now agreed a settlement but around two thirds of the planned reductions have yet to be finalised.
The Government has announced new plans to protect the Police’s counter terrorism capabilities in 2015/16, ahead of the Spending Review.
The Treasury also announced that six further provisional Spending Round settlements have been agreed.
These include: Home Office, DEFRA, DCMS, Scotland Office, Wales Office and the Law Officers Department (incorporating CPS, TSOL and SFO).
With 12 days to go, only 10 departments remain to be settled.
The six provisional settlements amount to:
- Savings of £1.1bn towards the £11.5bn savings target announced at Budget 2013.
- Taken with the near £1.5bn savings delivered at Budget and the £1bn of savings delivered in the first phase of settlements means, this brings total savings to £3.6bn, nearly a third of the way towards the £11.5bn.
- Around 8% of their combined budgets.
A warning from Chief of the General Staff General Sir Peter Wall over the risk of spending cuts comes with the MOD under pressure to deliver its share of £11.5 billion in savings across Government.
Defence has some protection in the 2015/16 review, to be unveiled on June 26. It will be guaranteed a 1% increase in equipment budgets from 2015.
But Defence Secretary Philip Hammond has still been asked to find a 5% cut in other spending.
- 2010 budget cuts mean the Army is already being reduced from 102,000 to 82,000.
- 2,860 personnel across all three services were made redundant in September 2011.
- A further 3,760 went in a second tranche last June.
In response to the head of the Army's warning that budget cuts could be "quite dangerous, quite quickly", Labour's shadow defence minister Kevan Jones said:
In response to the head of the Army's warning over potential cuts to the military budget ahead of the Chancellor's spending review later this month, the Ministry of Defence has said: