The German Defence Minister, Mr Rudolf Scharping, said yesterday he had won cabinet backing for broad plans to slim down and modernise Germany's conscript-based military.
Mr Scharping also said he had reached agreement with the Finance Minister, Mr Hans Eichel, on next year's defence budget and on medium-term financing for the Bundeswehr federal armed forces through 2004.
"We have completed our talks," Mr Scharping said. "We have a secure financial basis for the future of the Bundeswehr."
Mr Scharping's defence blueprint, the product of 18 months of soul-searching over Germany's role in the post-Cold War world, seeks to maximise the Bundeswehr's effectiveness and mobility while containing defence spending. He gave no figures but said that defence spending would not fall any further in 2004 than already envisaged under Mr Eichel's belt-tightening fiscal strategy.
Berlin spent DM 48.1 billion (£19.37 billion) on defence last year - or just 1.5 per cent of gross domestic product and the lowest defence spending ratio of any major NATO power. That figure is targeted to fall to DM 45.7 billion by 2003.
Under Mr Scharping's blueprint, Germany would cut its armed forces to 277,000 troops from around 320,000, with the number of conscripts falling to 80,000 from around 130,000.
In an attempt to boost the Bundeswehr's ability to deploy forces to international hotspots, the number of professional soldiers will be raised gradually by over 20,000 to 200,000.
Opposition parties accused Mr Scharping of trying to hustle through defence reforms without proper consultation and said he would struggle to contain defence spending if he maintained a large conscript force.
Mr Scharping said he hoped a cross-party deal could be reached once his defence reforms come before parliament. "The Bundeswehr needs as broad a social and political consensus as possible," he said.