Up to 20,000 military and civilian jobs, particularly in the Royal Air Force, could be axed in the shake-up, geared to saving pounds 2.3bn over the next three years to meet Treasury demands. More than 30 defence cost study teams have produced recommendations covering a range of other economies, including the closure of Ministry of Defence buildings, a dramatically-slimmed down MoD London headquarters, leasing of transport aircraft and vehicles and privatisation of spares stockists.
The number of senior military officers from the rank of brigadier upwards and their civilian equivalents would fall by at least 20 per cent.
But one of the most politically explosive proposals is the suggested closure of the Rosyth naval base in Fife, with warship work transferred to Portsmouth. A decision to move nuclear submarine re-fitting to Devonport has already been announced.
The MoD insisted yesterday that front-line forces would not be hit by the proposals, which ministers will study this week. A final package of proposals will be presented to Malcolm Rifkind, Secretary of State for Defence, next month.
The controversial plans are the fruition of last year's spending round commitment to make administrative and support savings, but there are fears of threats to Britain's security. MPs are expected to raise the issue in the Commons today.
David Clark, Labour's defence spokesman, said: 'This demonstrates the need for a proper defence review,' adding that the closure of Rosyth could be a disaster for Scotland, which was heavily dependent on the defence industry, and would be a betrayal of the Government's promise to keep the yard open.
Gordon Brown, the shadow Chancellor whose Dunfermline East constituency includes Rosyth, said: 'I believe there will be a Tory rebellion, leaving the party in huge disarray and division if John Major tries to close Rosyth.'