Around 11,000 British troops based in Germany will return home by 2016 under plans which will see nearly £2 billion invested in Army housing and bases, Defence Secretary Philip Hammond will announce today.
Under the speeded-up withdrawal, the remaining 4,500 troops will be back in the UK by 2019, a year earlier than planned.
Around £1bn of the funding being announced today will go towards 1,900 new houses for service families and accommodation for 7,800 single soldiers.
Another £800 million will be spent on infrastructure and refurbishment of bases.
The Government hopes the plans will mean more cash is ploughed back into the British, rather than German, economy as well as creating new construction jobs in the UK.
Savings of around £240 million a year are also expected to be made through reductions in operating costs.
On 28 November 1981, Katrice Lee was in an army store in Germany with her mother who was buying food for her daughter's 2nd birthday party later that day.
Katrice disappeared from her mother's sight and has not been seen since. Ever since, her family have been highly critical of the investigation by the Royal Military Police.
Tonight in the House of Commons, Hartlepool MP (speaking on behalf of Katrice's father Richard) said the investigation had been "incompetent, botched and insensitive". He said: "My constituent has suffered the anguish of his daughter going missing every single day for 31 years.
"That anguish is deeper with the knowledge that the investigation has been botched from the start. Incompetence has continued for many years, and we are no further forward in finding out what happend to little Katrice.
"Thirty-one years is far too long. The minister needs to pledge firm action to reassure Mr Lee tonight."
Defence Minister Mark Francois MP promised the family a face-to-face meeting with the Head of the Royal Military Police to question him on the progress of the reopened investigation. He added that there would be no cover up of previous errors made in the original inquiry.
He said: "I understand and support the unwavering determination of Katrice's parents to uncover the truth of what happened, and I can assure them that there will be no attempt to cover up any past failings.
"I am happy to repeat previous assurances given to the family that the Royal Military Police will be open about any failings that are identified, and that when the time is right we will look again at the issue of disclosure.
"I also know that the Provo Marshal Army, the Chief Officer of the Royal Military Police - Brigadier Bill Warren - has indicated that at an appropriate point in his teams work, he will ask a civillian police force to review the entire investigation."
The government has promised to help a family from Teesside more information on their daughter's disappearance. Katrice Lee was 2 years old when she went missing at a supermarket in Germany. The Royal Military Police said giving the files to the family would be inappropriate during an investigation.