Defence Secretary John Reid has warned Nato members that they must change for the alliance to survive.
Mr Reid will address a security conference in Munich
Mr Reid told the Associated Press greater flexibility and better co-ordination with the EU were needed.
He was speaking ahead of a security conference in Germany, which US Defence Secretary Donald Rumsfeld and German Chancellor Angela Merkel are attending.
He is expected to tell the meeting that Nato's future is in greater peril now than during the Cold War.
"Nato today faces greater threats to its long term future than it ever did at the height of the Cold War," he is expected to tell the conference in Munich on Saturday.
Mr Reid will say Nato is not guaranteed to "survive and prosper as the cornerstone of the collective security we need" but must change in order to meet new challenges.
On Friday, in an interview with the Associated Press (AP), he said: "Nato has been probably the most effective defence organization in world history, but no institution has the divine right to exist".
He said it was time to replace the big, immobile armies that characterised the Cold War with more flexible, rapid-response forces that could travel to trouble spots with little notice.
Nato's Secretary-General Jaap de Hoop Scheffer is also expected to offer guidelines at the conference on how the alliance should modernise.
Mr Reid said the EU and Nato needed to work in closer partnership, and suggested both had already worked well together during the peacekeeping mission in Sudan.
He also said the United States needed to understand that some of Nato's members did not have enough resources to take on the increasingly complicated task of the alliance.
But he added other member states must not always leave the bulk of operations to the larger countries.
"What we're saying to Nato is the first thing we've got to do is put our money where our mouth is as individual member states," he said.
In his speech Mr Reid will also explain that the alliance's future defence policy must look beyond terrorism to broader threats.
He will warn of "uncertainty in how the terrorist and proliferation threats of today will develop and interact with new and emerging risks that go beyond the traditional defence concerns. Like climate change, migration and resource pressures."
The Munich conference, which started in the 1960s, brings top policy makers and experts together to exchange ideas in a relaxed environment.
This year the main theme is the renewal of trans-Atlantic relations, while other topics will include the West's relations with Russia, the reform of Nato and Asian security concerns.