The committee warned that the forces were overstretched and would be "hard pressed" to undertake any further commitments, let alone a Falklands War-type emergency. They also accused the Government of complacency over continuing undermanning in the Army.
The Commons will vote on the annual defence White Paper as soon as Parliament returns from recess in the autumn. Three large defence equipment orders, worth pounds 4bn, which had been expected before the recess today, have been delayed as the Ministry of Defence argues the case for them with the Treasury.
The report on the 1996 statement on the defence estimates by the all- party Commons Defence Committee said they would not recommend the statement to the House "unless ministers make clear in the debate that this year's statement will not again be undermined by further defence cuts in the 1996 budget or by any other means".
The Army, 120,000 strong, now has 18,500 troops serving in Ireland and 11,000 in Bosnia. Most of them are on six-month tours, so nearly half the Army will see active service in one of those theatres in the course of a year. Committee members warned yesterday that repeated breaches of the rule that units should have a two-year interval between active tours was damaging training. Too much time on peace-keeping duties in Bosnia was leading to a "skills fade" when it came to training for full- scale war. The MPs concluded: "Either Bosnia is too big a commitment for the Army, or the Army is not big enough for the tasks it is being given".
The committee said there was government "complacency" over the shortfall in army recruiting and the loss of trained soldiers from the Army.
They expressed approval that paying off the Royal Yacht Britannia, which is manned by the Navy and has a nominal role as a hospital ship, "will relieve the defence budget of a significant burden". However, they recommended that the Navy should continue to man a replacement vessel, to be built in a British shipyard by 2000.
Dr David Clark, Labour's defence spokesman, said: "The Government's defence policy lies in tatters. The Treasury is now running Britain's defence policy. Michael Portillo has failed to stand up for Britain's defence interests and the result is continued decline and overstretch."