Police search MoD headquarters for letter leak source
Ministry of Defence police have searched the MoD's headquarters to try to find who leaked a private letter sent by Defence Secretary Liam Fox.
The letter to David Cameron, leaked to the Daily Telegraph, warned "draconian" spending cuts while the UK is at war would result in "grave consequences".
Dr Fox said he was "appalled" by the leak and he had had "tremendous support" from David Cameron.
Labour said the government was in "chaos" over defence spending.
In the letter to Mr Cameron leaked to the Daily Telegraph, Dr Fox said he would would refuse to back any substantial cuts to the armed forces.
He said: "Party, media, military and the international reaction will be brutal if we do not recognise the dangers and continue to push for such draconian cuts at a time when we are at war."
He suggested the Tories could destroy "much of the reputation and capital" they had accrued on defence.
If cuts go ahead, he warned, the "range of operations that we can do today we will simply not be able to do in the future".
The Navy might have to withdraw from some parts of the world, the ability to conduct small-scale missions such as in Sierra Leone in 2000 may disappear and civil contingency plans for the 2012 Olympics and future flu pandemics could be hampered.
He also expressed concern about the potentially "serious damage" that cutbacks could do to morale in the Armed Forces.
The letter was written ahead of Tuesday's meeting of the National Security Council, where defence chiefs, the prime minister and the defence secretary considered the options for the strategic defence and security review (SDSR).
Dr Fox expressed concern that the process was looking more like a spending review than a strategic review.
Speaking on Wednesday morning to the BBC, Dr Fox condemned the leak as "appalling".
He said there were always going to be "robust" discussions about future priorities given the "shambolic" financial situation the coalition had inherited from Labour.
But he said there was a mechanism to have a "proper collegiate and collective" debate about the country's defence needs.
He added: "I've had tremendous support from the Prime Minister who fully understands the problems Labour left behind.".
Ministers were working together to ensure the "best outcome" from the strategic defence review, he said, adding that he was "fully committed" to ensuring British troops in Afghanistan continued to receive all the support they needed.
The National Security Council did not make any final decisions on Tuesday, and will meet again after the Tory conference next week, with the review due to report in October.
Reports have suggested that ministers decided to ringfence the Afghan mission from any future cuts.
Gen Sir Richard Dannatt, former head of the Army, said the MoD was already under severe financial pressure due to a huge overspend on procurement under the previous government.
"The wisdom of Solomon is going to have to be exercised by the prime minister to make the right decision," he said.
"I think he [Liam Fox] is very right to make a very strong case, particularly as we're caught up in a very difficult operation in Afghanistan which we've got to get right, which has to be properly funded.
"I think that if the UK wants to go on playing a significant role in the world, it has to have some form of power projection."
The BBC's Caroline Wyatt said the leak was damaging, and made clear the tensions and divisions over the defence review.
She said Downing Street was playing down the letter, saying it was natural for a defence secretary to make "robust representations" about his department's budget.
But Labour said Dr Fox's letter showed the defence review was clearly being driven by financial not security imperatives.
"This is an incredible letter which reflects many of our concerns about their approach to the review," said shadow defence secretary Bob Ainsworth. "Rushed decisions that are not based on our strategic needs pose a real risk for our future security.
"David Cameron needs to finally show some leadership and take control."
Budget black hole
The review, the first since 1998, began after the general election.
The last one took more than a year and MPs have criticised the speed of the process, the Defence Select Committee saying earlier this month that it could put combat operations at risk.
The review is designed to look at the UK's role in the world, evolving threats to the country's interests and whether the armed forces are equipped to deal with future challenges.
The UK's annual defence budget is approximately £37bn, which is about 2.5% of GDP. Cuts of 10-20% are expected as part of the government's austerity measures to reduce public spending.
Speculation on what will be affected has ranged from the scrapping of new aircraft carriers to grounding the RAF's entire fleet of more than 70 Tornado jets years earlier than planned.