New treaties on defence and nuclear joint working with France marked a "new chapter" in a long history of defence co-operation, David Cameron has said.
A UK centre will develop nuclear testing technology while one in France carries it out and there are plans for a joint army expeditionary force.
After signing the treaties with Nicolas Sarkozy, the UK PM said it would make citizens safer and would save money.
But Labour suggested it could limit the UK's ability to act independently.
After he and French President Nicolas Sarkozy signed the two treaties, Mr Cameron said: "Today we open a new chapter in a long history of co-operation on defence and security between Britain and France."
He said it was not about a European army or about sharing nuclear weapons.
"Britain and France are, and will always remain, sovereign nations, able to deploy our armed forces independently and in our national interest when we choose to do so."
But Mr Cameron said the vast bulk of Britain's military operations over the past few decades had been carried out with allies and said co-operating on testing nuclear warheads would save millions of pounds.
"It is about defending our national interest. It is about practical, hard-headed co-operation between two sovereign countries."
He added that one treaty would commit the two countries' forces to work "more closely than ever before" while the other - to last 50 years - would increase co-operation on "nuclear safety".
The nuclear treaty will establish a centre in the UK to develop testing technology and another one in France to carry out the testing. Warheads will be tested by technical means to ensure their safety and effectiveness, without having to test them by explosion.
The other treaty will allow the setting up of a "combined joint expeditionary force", thought to involve a brigade of about 5,000 soldiers from each side, which will operate under one military commander to be chosen at the time.
The UK and France have also agreed to keep at least one aircraft carrier at sea between them at any one time. Each will be able to use the other's carrier in some form, certainly for training and possibly operations.
Mr Sarkozy described the agreement as "unprecedented". He said the treaties would deliver "a truly integrated aircraft carrier group" but dismissed suggestion that they would infringe on either country's sovereignty.
The two leaders faced questions about what would happen if one country backed a military operation and the other did not. Mr Cameron said there would have to be "political agreement" for the joint taskforce to be deployed.
Mr Sarkozy said it would be unlikely that Britain would face a crisis so great that it needed an aircraft carrier without France being affected: "If you, my British friends, have to face a major crisis, could you imagine France simply sitting there, its arms crossed, saying that it's none of our business?"
But Conservative MP Bernard Jenkin told the BBC that while he approved of the talks, Britain had to be "realistic". He said there was "a long track record of duplicity" by France in dealing with allies and questioned whether the French would make an aircraft carrier available for an operation like the Falklands. He said if the US felt Britain was sharing intelligence "too freely" with Paris, they would "cut us off" from intelligence and technology.
But former Lib Dem leader Lord Ashdown said: "The French believe we are duplicitous as well, but I just think this is terribly out of date.
"Do we have a future common interest? Yes. Are there practical ways we can work together to provide better effect? Yes. I am strongly in favour of this."
But he suggested the French government saw the deal as the first move towards wider European defence co-ordination - which may not find favour with some Eurosceptic Conservatives.
The summit comes two weeks after the UK government announced cuts to its armed forces as part of savings aimed at reducing the country's budget deficit.
The agreement includes plans for common maintenance and training on the A400M transport aircraft - which both countries are acquiring - and the possibility of France using the UK's air-to-air refuelling aircraft, when there is spare capacity and training.
There will also be joint work on drones, mine counter-measures and satellite communications.
In a statement, the French presidency said the nuclear test centre in Valduc, eastern France, would start operations in 2014 and would work with a French-British research centre based in Aldermaston, Berkshire.
Together the facilities would involve "several dozen" French and British experts and cost both countries several million euros.
The UK's shadow defence secretary Jim Murphy said in the Commons he welcomed the agreements in principle but asked for assurances that they would not limit the UK's ability to act independently "in all circumstances" - such as the defence of overseas territories.
He also questioned whether the treaties were legally binding, whether they could change every five years as the countries' military capabilities changed and queried whether the deals could jeopardise the UK's relationship with the US - Dr Fox said the Americans had been fully consulted and were happy with the agreement.
Mr Murphy questioned whether the the UK was entering "an era where we are reliant on our allies to fill in the gaps in the government's defence policy".
However, However, Mike Clarke, director of the Royal United Services Institute, said: "Both sides will gain from this a lot of synergies in their forces, but we've had those before.
"What's different this time is that they may genuinely start to pool forces... That will bring some real military benefits."
French military analyst Francois Heisburg told the BBC the extent of the agreement over nuclear weapons was "without precedent".