The future of the RAF and Royal Navy were thrown into doubt last night after the head of the Armed Forces said their merger should be 'debated'.
Cash-strapped: Air Chief Marshal Sir Jock Stirrup has not ruled out an amalgamation of the RAF and the Navy.
Sir Jock Stirrup caused consternation when he failed to rule out the amalgamation of two of the three cash-strapped military services.
The Chief of the Defence Staff said it was only 'plausible' that they would all exist separately in ten years' time.
The drastic cuts needed and the growing cooperation between forces in Afghanistan raised the controversial possibility that the air and sea service could unite.
Sir Jock made his comments at the unveiling of the Government's Green Paper on military reform, which lays the groundwork for a full-scale strategic defence review after the General Election.
The document, published by Defence Secretary-Bob Ainsworth, revealed no spending figures nor any indication of how the Armed Forces would look after the long-awaited shake-up. But it was revealed that:
* Defence chiefs will be forced to compromise on purchasing costly state-of-the-art equipment as ministers battle to reduce the nation's £178billion deficit;
* Britain can expect higher casualty rates as we are dragged into guerilla wars with increasingly sophisticated enemies;
* Despite the nation's battered finances, ministers will press ahead with the £20billion update of the Trident nuclear deterrent;
* The Armed Forces will have to work more closely with the French and other allies as spending cuts bite.
Mr Ainsworth also announced that the war in Afghanistan - which has claimed the lives of 253 UK service personnel - remained the top defence priority. Funding for troops and equipment will rise from £3.5billion to £5billion next year.
And despite the urgent need for the MoD to cut costs in the face of a £ 36billion shortfall, he said that two new aircraft carriers costing £5billion each would 'most likely' go ahead.
The Green Paper warned: '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 that we need.'
The total number of British service personnel - 188,440 - is dwarfed by that of China and the U.S. and even trails that of France.
The Defence Secretary refused to say where cuts - expected to be significant - would be made in the defence budget.
But Sir Jock admitted that it was 'plausible' that one of the three services could be cut in future.
Top of the list: Afghanistan will remain the priority, with funding set to rise.
He warned against 'duplications, overlap and inefficiencies' in the Army, Royal Navy and RAF, while insisting the three could work seamlessly together. However, he said: 'There are interesting issues to be debated here.'
Experts suggested that the RAF - formed in 1918 - could be most vulnerable to the axe. Its fast jets, transport planes and helicopters could be split between the Army and Navy.
Mr Ainsworth said he did not foresee 'major structural change' but warned: 'Not allowing single service interests to stand in the way of efficient delivery of security to the nation is something we have to look at.'
He added that the UK must prioritise its defence capabilities because it could not afford to 'insure against every risk'.
He made clear Labour would not scrap the Navy's new aircraft carriers despite criticism they were unaffordable and unsuited to modern conflict.
However, he refused to be drawn on the 140 Joint Strike Fighters intended to fly from the warship. The price of each jet has soared from £37million to more than £62million in four years.
He paved the way for greater military co-operation with France in a 21st century 'Entente Cordiale' while insisting the U.S. would remain Britain's most important ally.
'Our Armed Forces must be prepared if called upon to protect our interests, often in distant places, and most likely as part of a coalition of international forces,' he said.
Mr Ainsworth also promised legislation to force future governments to carry out a strategic defence review every four years. The last was in 1997 soon after Labour entered power.
Tory defence spokesman Liam Fox said: 'That our nation's security should be compromised by Labour's historic economic incompetence is truly a national tragedy.'