The UK's annual defence budget will be £7bn a year higher than previously committed to, by 2024-25.
Prime Minister Boris Johnson said a "once in a generation modernisation" of the UK's armed forces was needed.
It is part of the government's Integrated Review, examining "the long-term strategic aims" of UK national security, as well as defence, development and foreign policy.
So how will it affect UK defence policy?
What has happened with defence spending?
From 2010 to 2017, annual defence spending fell by £6.6bn in real terms. That was a cut of 14.6% compared with the 2009-10 Budget, according to an analysis of government figures by the Institute for Fiscal Studies.
Since the 2016-17 financial year, however, annual defence spending has increased by £3bn in real terms.
The extra funding promised as part of the Integrated Review means that by the 2024-25 financial year the defence budget will be £51.7bn in cash terms, an increase of 17.7% from this year's Budget when adjusted for inflation;.
According to Fenella McGerty, from the International Institute for Strategic Studies (IISS), "the announcement takes us further down the path of focusing on technology rather than personnel".
She told BBC Reality Check: "Defence investment and research and development expenditure makes up 22% of our defence budget, which compares favourably with other countries.
"This is likely to make up an even bigger proportion of spending in the future."
Quarterly figures from the Ministry of Defence show the size of the British army has been steadily falling over the past decade.
Trevor Taylor, of the Royal United Services Institute, said: "It's clear we want to have a high-tech set of armed forces, like the United States, but what that will involve cutting hasn't been settled yet.
"This is a more than generous settlement that sends a signal that the government intends to maintain defence at a higher rate of GDP than 2% for many years."
How does the UK compare internationally?
An IISS study attempts to rank the world's biggest defence budgets.
It puts the UK's fourth behind China, Russia and the United States.
The USA spends more on defence than all of the other countries in the top 10 combined, with a budget of $738bn (£557bn) a year.
But when defence expenditure is analysed as a proportion of gross domestic product (GDP), the UK falls to seventh in the world.
As it stands, the UK spends 2.33% of GDP on defence.
Since 2014, Nato has set a target for its members to spend 2% of GDP on defence.
However, there has been criticism surrounding the methodology used to calculate these numbers, such as whether war pensions count as defence spending.
Reporting by Oliver Barnes
This article has been updated from a previous piece published in 2018.