The UK is to reduce the size of heavy armoured forces in favour of units that can be sent into action quickly, Defence Secretary Geoff Hoon told MPs.
There are fears the army's Challenger tanks are under threat
Some older ships could also be taken out of service as the two new aircraft carriers, the Joint Strike Fighter and Type 45 destroyers, start use.
The growing challenge of terrorism and other world conflicts needed a "radical rebalancing" of UK armed forces.
Mr Hoon was outlining an overhaul of the way British forces are organised.
Mr Hoon told the House of Commons: "This is a changing world and
we must adapt if our armed forces are to stay ahead of potential adversaries.
"We must exploit new and emerging technologies and we must be prepared to
make tough decisions to ensure that our armed forces are able to carry out the
difficult tasks we ask of them."
ARMED FORCES EQUIPMENT
Aircraft carriers: 3
Challenger 1 tanks: 178
Challenger 2 tanks: 341
Attack helicopters: 254
Combat aircraft: 502
Source: UK Defence Statistics
Outlining the Defence White Paper, Mr Hoon said the Army needed to move to "a more appropriately balanced structure" of light, medium and heavy forces.
In the future the UK's Armed Forces would be expected to be able to deal with "multiple, concurrent small to medium sized" missions, he said.
The Army would establish a new light brigade, reducing the number of armoured brigades from three to two.
In the air, the Typhoon and the Joint Striker Fighter offered multiple capabilities which would allow the deployment of fewer aircraft than previously thought necessary.
Mr Hoon told MPs: "Counter terrorism and counter proliferation operations in particular will require rapidly deployable forces able to respond swiftly to intelligence and achieve precise effects in a range of environments across the world."
Forces would also have to be capable of dealing with enduring peacekeeping duties while still being able to tackle large scale operations such as Iraq.
Historically, military capability was measured in weight of numbers and equipment, but in the modern world it would be measured in terms of an ability to act quickly accurately and decisively, he said.
Lessons from Iraq
"Technology will be a key driver for change," said Mr Hoon.
He insisted that for large scale operations the Armed Forces would have to be able to work closely with those of the US.
While Nato would remain the basis for collective
defence of its members, European Union defence would complement the
Mr Hoon coupled his announcements with the publication of a report on lessons to be learned from the Iraq war.
The conflict was a "significant military success," in which the
armed forces "performed magnificently", he said.
Joint Strike Fighter: 150
Type 45 Destroyers: 12
Conservative shadow defence secretary Nicholas Soames said while his party agreed with the "fundamental thrust
of the White Paper", it had "grave reservations" about the government's
"Given that there are so few hard facts in the White Paper we are concerned
that a whole raft of decisions on cuts will start to leech out later," he said.
His party recognised the need "to embrace whole-heartedly the new
technology", but he warned: "We under-estimate at our peril the importance of the foot soldier."
Lib Dem defence spokesman Paul Keetch added: "The focus on effects-based operations is welcome, but it must not come at
the expense of troop numbers."
Earlier, Mr Hoon told BBC Radio 4's Today programme that he wanted to spend "a significant proportion" of the more than £3bn extra money available to defence on technology.
He admitted that the gap between infantry tours of duty was 10 months, instead of his target of two years.
But this was because of the "extraordinarily busy" last two years, with operations in the Balkans, Northern Ireland, the Falklands, Iraq, Afghanistan and at home with foot and mouth and the fire dispute.
Mr Hoon said recruitment had been "astonishingly good" in recent times.
The armed forces had to compete with the private sector to attract something like 25,000 young people to join up each year, he said.
Former assistant chief of the defence staff Tim Garden told BBC Breakfast: "It is about money, whatever the chiefs may say."
He pointed to how defence spending had fallen as a share of gross domestic product.
Manpower was an expensive resource, he said, and an overhaul could provide more "bang for the buck".