Defence Secretary Philip Hammond said: "The savings that I have agreed will have no impact on military manpower or equipment.
"Our Armed Forces will continue to be backed by the fourth largest defence budget in the world and a programme of investment in state of the art equipment worth about £160 billion.
“By renegotiating contracts with industry and reforming the way we procure equipment, we will deliver hundreds millions of pounds worth of savings to reduce the country’s deficit without impacting on the Armed Forces’ ability to operate effectively.
“The ambitious and far-reaching reforms we began in 2010 have eliminated the £38 billion black hole inherited from Labour and balanced the defence budget for the first time in a generation.
"We are determined to ensure that the Armed Forces of the future have the resources they need to deliver our nation’s security.”
Shadow financial secretary to the Treasury Chris Leslie writes for ITV News in response to the Chancellor's Spending Review.
While the Conservatives and Lib Dem strategies are clear enough, Labour's response to government cuts is not yet obvious.
By excluding pensions and the benefits associated with the economic cycle, Osborne has put an automatic cap on a narrow range of benefits.