Defence Secretary Ben Wallace has said the Army will be cut to 72,500 troops by 2025, saying it has not been at its "established strength" of 82,000 since the middle of last decade.
He told the Commons he had taken the decision to reduce the size of the army by 4,000 but that the reduction will not require redundancies.
He said: "The army’s increased deployability and technological advantage will mean that greater effect can be delivered by fewer people.
“I have therefore taken the decision to reduce the size of the army from today’s current strength of 76,500 trade trained personnel to 72,500 by 2025.
“The army has not been at its established strength of 82,000 since the middle of last decade. These changes will not require redundancies and we wish to build on the work already done on utilising our reserves to make sure the whole force is better integrated and more productive."
Mr Wallace said that previous reviews have been "overambitious and underfunded" adding that in the past "we have been too tempted to fund equipment at the expense of our service personnel’s lived experience."
"That is why over the next four years we will spend £1.5 billion on improving single living accommodation and £1.4 billion on wrap around childcare over the next decade," he added.
He said: "Previous reviews have been overambitious and underfunded, leaving forces that were overstretched and under-equipped. This increased funding offers defence an exciting opportunity to turn our current forces into credible ones, modernising for the threats of the 2020s and beyond and contributing to national prosperity in the process.
“It marks a shift from mass mobilisation to information age speed, readiness and relevance for confronting the threats of the future.”
The review comes days after a scathing report by the Commons Defence Committee that said a history of “bureaucratic procrastination, military indecision and financial mismanagement” had marked attempts to re-equip the Army over the past two decades.
The Defence Secretary said:
The Second Battalion to the Mercian Regiment will be amalgamated with the First Battalion to form a new Boxer mounted battalion but that "no major unit deletions further will be required".
There will be "no loss of cap badges" and the "new structures will require fewer units".
Regiments will be reorganised to sit in four infantry divisions.
The Ministry of Defence will prioritise more than £6.6 billion of research development and experimentation over the next four years.
Strategic command will partner with the RAF to deliver a "step-change in our space capabilities" and from 2022 the government will start delivering a "UK-built intelligence, surveillance and reconnaissance satellite constellation".
The E-3D Sentry will be replaced by a “more capable fleet” of three E-7 Wedgetail in 2023 based at RAF Lossiemouth.
The C-130J Hercules will be retired in 2023 and 22 A400Ms alongside the C-17 "will provide a more capable and flexible transport fleet".
Nine Reaper drones supporting counter-terror operations will be replaced by Protectors in 2024 to "provide enhanced strategic ISR (Intelligence, Surveillance, Reconnaissance) and strike capabilities".
The Typhoon radar will be upgraded and £2 billion will be invested in “future combat air systems” over the next four years.
He said “the final details” of the divisions along with the “wider army restructuring” will be announced "before the summer".
But Shadow Defence Secretary John Healy warned the defence review will “repeat many of the same mistakes” of the past.
He said: "We need this reassessment because the last two Conservative defence reviews have weakened the foundations of our armed forces. Cut our full time armed forces by 45,000, cut the defence budget by £8 billion, cut critical defence capabilities and upgrades largely to deal with budget pressures.
“Now the Prime Minister promised an end to this era of retreat. The Defence Secretary pledged this review would be different. Yet I fear this defence review is set to repeat many of the same mistakes.
“The strength of our armed forces cut again, crucial military capabilities cut again, plans to complete a full overhaul of the army in 10 years’ time again. So how can I say to the secretary of state does the Government square this circle?”
Warning the “threats to Britain are increasing”, Mr Healey added: “This is a plan for fewer troop, fewer ships, fewer planes, over the next few years.”
Mr Wallace warned against playing “Top Trumps” with military personnel numbers.
He recalled his army experience and how it could, on paper, have fielded three armoured divisions in Germany but “in reality could muster much less”, telling MPs: “It was in truth a hollow force.
"That is why while I know some colleagues would rather play Top Trumps with our force numbers, there’s no point boasting about numbers of regiments when you send them to war in snatched Land Rovers or simply counting the number of tanks when our adversaries are developing new ways to defeat them."
Mr Healy told the Commons: "Our full-time forces are already nearly 10,000 below the strength the minister said in 2015 was needed to meet the threats Britain faces.
"How can the secretary of state argue that these deeper cuts will not limit our forces’ capacity simultaneously to deploy overseas, support allies, maintain strong national defences and also reinforce domestic resilience as they have been helping our country through the recent Covid crisis?”
Ben Wallace responded: “Oh dear, I slightly get the impression that no matter what I brought today to this House that speech would have been trumped out. I mean, this is not a defence review that usually takes part amongst an environment of cuts.”
Conservative chairman of the Defence Select Committee Tobias Ellwood warned that the review comes at a "hyge price to our conventional defence posture" which if tested by parliamentary vote would not pass.
He said: "Why? Because the Government’s own Integrated Review paper spells out in very clear language how dangerous this next decade will be, more so than in the Cold War where defence spending was plus 4% of GDP.
“Today we face multiple complex threats to our security and our prosperity, yet our defence spend remains at a peacetime level of just 2.2%. With international rivalry increasing Western influence on the retreat, we must wake up to how dangerous the next decade will be. Is it not the time to increase the defence budget to 3% so these dangerous cuts to our conventional hard power can be avoided?”
Mr Wallace replied the budget was “incredibly generous” compared to other departments, adding: "It is a defence budget big enough to allow me to both fix the issues of the past and invest in modernisation."