Women serving in the UK armed forces are subject to "significant sexual harassment", John Reid has admitted.
The MoD has promised action against sexual harassment
The Equal Opportunities Commission (EOC), which has legal powers to force action against harassment, intervened after 2,390 complaints in a year.
Now the defence secretary and the EOC have agreed on an action plan to assess the problem and address it.
Staff surveys showed harassment affected 20% of Naval women, one in eight in the Army, and 10% in the RAF.
The action plan, signed by Mr Reid, the acting chairman of the EOC, Jenny Watson and Chief of the Defence Staff Sir Michael Walker at an MoD news conference, halted the EOC's investigation.
Complaints take too long
The staff surveys exposed a far greater level of harassment of servicewomen than the Mod's official complaint procedure had ever indicated.
The agreement said: "There is a worrying discrepancy between the proportion of people who say they have experienced sexual harassment and the actual number of formal complaints made. Furthermore, many complaints are taking too long to resolve."
Taking action would lead to a far more effective military, Mr Reid argued, branding harassment "corrosive" and said all servicemen and women deserved to be treated with respect.
Recent cases taken to employment tribunals included a Nimrod pilot who said she was constantly subjected to sexist and rude comments which were dismissed as being part of the "maritime tradition".
Ms Watson said: "On the basis of complaints received by the EOC, information supplied by the MoD, and the findings of the Armed Forces' own surveys, there is clear evidence that, despite the efforts that have been made, significant sexual harassment still exists across the Armed Forces.
"This would justify a formal investigation using our legal powers however, we have chosen to suspend the investigation as the MoD has convinced us that they are going to take decisive and immediate action to tackle the problem."
She added that by signing up to the action plan Mr Reid had recognised the need to "urgently and systemically" tackle sexual harassment.
Wing Commander Sheila Haughton was quizzed at the press conference as to whether she had suffered harassment.
She said it had not been a problem personally although she admitted that when she joined up 23 years earlier she had put up with comments that would be seen as unacceptable now.
Gen Walker said: "The action plan we have drawn up with the EOC aims to create a working environment in which sexual harassment is unacceptable and in which service personnel who suffer it feel able to complain and have confidence in the complaints process."