David Cameron confirmed that warships, fast jet fighters and thousands of soldiers, sailors and airmen would face the axe as he unveiled details of the Strategic Defence and Security Review in the House of Commons.
Under the revised planning assumptions in the SDSR, the forces will be able to mount one enduring brigade-level operation, with up to 6,500 personnel, compared to the 10,000 currently deployed in Afghanistan, plus two smaller interventions.
Alternatively they will be able to mount a one-off, timed-limited major intervention - "with sufficient warning" - of up to three brigades with around 30,000 personnel - two thirds of the force deployed to Iraq in 2003.
Mr Cameron also announced a scaling back of the Trident nuclear deterrent, cutting the stockpile of warheads from 160 to 120 and the maximum number of warheads on each submarine from 48 to 40.
He confirmed the key "main gate" decision on the renewal of the missile-carrying submarine fleet would be put back until after the general election in 2016 - leaving open the possibility that it could be abandoned by a future government.
Mr Cameron told the Commons that while the UK needed to retain the ability to mount operations overseas, strategy had become "over-reliant on military intervention" and that in future the emphasis would be on preventing conflicts.
"Britain has punched above its weight in the world and we should have no less ambition for our country in the decades to come," he said.
"But we need to be more thoughtful, more strategic and more co-ordinated in the way we advance our interests and protect our national security."
However the SDSR was dismissed by Labour leader Ed Miliband as a cost-cutting exercise which failed to address the security needs of the country.
"It is a spending review dressed up as a defence review, it has been chaotically conducted, it has been hastily prepared and it is simply not credible as a strategic blueprint for our future defence needs," he said.
Mr Cameron said that the cuts represented a real terms reduction of "only 8%" in the defence spending over the next four years and that Britain would continue to meet its Nato target of committing 2% of GDP to defence.
However officials refused to say whether operational spending in Afghanistan would now count towards the target. Previously only the core defence budget has been counted.
In the key decisions facing the three services, the Army will:-
* Cut the number of troops by around 7,000, taking it to 95,000 by 2015;
* Reduce its holdings of Challenger 2 battle tanks by 40% and heavy artillery by 35%;
* Cut the number of deployable brigades by one, as it re-structures to five multi-role brigades.
The Royal Navy will:-
* Get its two planned new aircraft carriers while scrapping the existing HMS Ark Royal with immediate effect;
* Decommission either the helicopter landing ship HMS Ocean or HMS Illustrious while retaining one as a helicopter platform:
* Cut its surface fleet of frigates and destroyers from 23 to 19;
* Reduce the number of naval personnel by 5,000 to 30,000.
The RAF will:-
* Remove the Harrier fast jet fighters from service, while scaling back the number of Tornados;
* Scrap the planned Nimrod MRA4 maritime reconnaissance aircraft, despite spending £3 billion on its development;
* Withdraw the C-130 Hercules transport fleet ten years earlier than planned, as the new A400M enters service.
The cuts to aircraft mean that the RAF will no longer require three of its bases, including Kinloss in Scotland.
However some of the bases could still be retained to accommodate the 20,000 troops currently stationed in Germany, who will be brought back to the UK by 2020.
A study of the bases of all three services is expected to report in the early part of next year.
Overall the Ministry of Defence will cut the number of civil servants by 25,000.
The SDSR did include some increases in capability - including 12 new Chinook transport helicopters, more armoured vehicles and additional investment in special forces.
Officials confirmed that no infantry battalions would be cut as long as the Army remained engaged on major combat operations in Afghanistan.
The most controversial element of the plan has however been the programme to build the new aircraft carriers, even though there will be no aircraft to fly from them for ten years.
Mr Cameron blamed the "appalling legacy" of the previous Labour government which meant that it would be more expensive to cancel the second boat than to build it.
While both ships will now go ahead, one will be put on "extended readiness" - effectively mothballed - and may be sold off.
Officials confirmed that, with the axing of HMS Ark Royal and the Harriers, the UK would have no fixed-wing aircraft carrier capability until 2020 when the new US-built Joint Strike Fighter (JSF) becomes available.
The operational carrier will now be fitted with catapult and arrestor gear - "cat and trap" - enabling the acquisition of the cheaper, more capable carrier-variant of the JSF rather than the short take-off, vertical landing version.
The change also will mean that US and French aircraft will now be able to operate from carriers, which would otherwise not have been possible.
No final decision has been taken on the number of JSFs that will be bought, although the SDSR said that the operational carrier would normally carry 12 rather than the 36 originally envisaged.
The SDSR was tonight strongly attacked by a former chief of the defence staff, Admiral Lord Boyce, who said the measures would be viewed with "dismay" by service men and women.
"I cannot say I welcome the statement on this cash-driven defence review and I certainly can't possibly dignify it with the word 'strategic'," he told the House of Lords.
Earlier, Mr Cameron was given a taste of the pain being felt within the forces when he was directly challenged by Lieutenant Commander Kris Ward, a Harrier pilot, during a visit to Permanent Joint Headquarters at Northwood.
"I have flown 140 odd missions in Afghanistan, and I am now potentially facing unemployment," he told the Prime Minister. "How am I supposed to feel about that, please, sir?"
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