Since the Second World War, the nation has maintained a force that can conduct all-out warfare, counter-insurgencies such as in Afghanistan or medium scale campaigns like the Falklands or Sierra Leone.

But Dr Fox has given the strongest signal yet that it will have to give up one or more of these capabilities, which have been maintained at the same time as contributing to collective security pacts such as Nato. “We don’t have the money as a country to protect ourselves against every potential future threat,” he said. “We just don’t have it.”

The military had to be configured only for “realistic potential future threats”, he said, hinting at a substantial cut to conventional forces such as tanks and fighter aircraft.

“We have to look at where we think the real risks will come from, where the real threats will come from and we need to deal with that accordingly. The Russians are not going to come over the European plain any day soon,” he added.

Dr Fox’s frank admission also casts doubt on the future of the 25,000 troops currently stationed in Germany. The Defence Secretary has previously said that he hoped to withdraw them at some point, leaving Britain without a presence in the country for the first time since 1945.

“I would say, what do Challenger tanks in Germany and the costs of maintaining them and the personnel required to train for them, what does that contribute to what’s happening in Afghanistan?” he asked.

The Ministry of Defence is facing a substantial squeeze on resources, with indications that 30,000 servicemen may be sacrificed to meet the Government’s stringent review of departmental budgets.  (photo: Christopher Pledger/Telegraph)