Britain's armed forces could be used on a regular basis on the streets of Britain to confront the threat of terrorism, under the terms of a strategic defence review announced yesterday.
Two of the six "key questions" to be considered by the SDR will focus on domestic threats which "cannot be separated from international security", according to a Green Paper setting out the grounds for a full scale review to start after the election.
Decisions need to be made on the "balance between focusing on our territory and region and engaging threats at a distance" and "what contribution the armed forces should make in ensuring security and contributing to resilience within the UK".
The paper states: "Stronger, more effective partnership with other Whitehall departments, the intelligence agencies, police forces and others at the national level will become even more important to achieving our security objective."
One proposal due to be considered, according to Whitehall officials, was the formation of a rapid reaction force which could be deployed to counter Mumbai-style terrorist attacks and carry out swift operations outside the country.
On long-term missions overseas the economic circumstances meant that Britain will have to co-operate more closely with international allies like France, said the paper. While the US remained Britain's most important strategic ally, much closer co-operation should take place with other countries.
"In Europe, the return of France to Nato's integrated military structure offers an opportunity for even greater co-operation with a key partner across a range of defence activity" it added.
The main theme of the Paper was "adaptability", imperative due to the varying demands on limited resources. The 52-page document admitted that although commanders on the ground in Afghanistan have shown the ability to adapt rapidly to challenges this had been undermined by the system in London.
"There is a widely held view within defence that our structures and processes have hindered strategic adaptation to evolving challenges and have not been as effective as they should have been in supporting commanders' innovation on the ground."
The Paper made it clear that the SDR will have to carried out against the backdrop of the £178bn deficit in the public finances. Defence Secretary, Bob Ainsworth, stressed: "The wider financial context means resources across government will be constrained. We should not underestimate the scale of that challenge.
"We cannot proceed with all the activities and programmes we currently aspire to, while simultaneously supporting our current operations and investing in the new capabilities we need."
The SDR, the first one in more than a decade, is supposed to take a "root- and-branch" look at defence policy with the constraint on spending a major factor. The Ministry of Defence has a £35m black hole in its budget.
However, in presenting the Green Paper yesterday Mr Ainsworth stated three times that he did not expect it to be too "radical". He also said that one of the most contentious investment in defence, two new aircraft carriers for the Royal Navy, is likely to go ahead.
Senior officers in the Army, doing the vast bulk of the fighting previously in Iraq, and now in Afghanistan, have forcefully argued in private that the carriers were a luxury in the current economic circumstances and were relics of the cold war in the age of the insurgent.
Mr Ainsworth said yesterday: "The strategic defence review will have to take a pretty radical direction not foreseen by me in order to suggest those capabilities will not be required" he said.
"While of course the whole defence is in the review we understand the commitments we have already made and the likelihood that those will continue to be a requirement in the future."
The Defence Secretary also confirmed that the £20bn updating of the Trident nuclear programme, another source of debate, will also go ahead.
Conservative defence spokesman, Liam Fox, questioned how much Britain could afford to rely on European allies such as France. "We also agree that France and the United States are likely to be our main strategic partners" he said. "For us there are two tests; do they invest in defence? And do they fight? Sadly, too few Europeans pass that test."
Liberal Democrat defence spokesman, Nick Harvey, said the omission of Trident from the review had left the Green paper "unbalanced". He continued: "Surely the manner, the scale and the timing of any replacement of Trident has cost implications for the entirety of the rest of the defence budget."
The Military Balance, an annual assessment of international defence published by the International Institute for Strategic Studies yesterday showed that China and India significantly raised their defence spending in 2009.
India raised its defence budget by 21 per cent following the Mumbai attack the previous year, while China raised its spending in the field by 15 per cent.