Defence Secretary Philip Hammond said the changes would save £240 million a year in running costs as soldiers are moved into "clusters" in key locations.
Returning forces will mainly be stationed around Edinburgh, Leuchars, Salisbury Plain, Catterick, Aldershot, Colchester, Stafford and the East Midlands.
With the size of the Army already being substantially reduced however, it will also mean several other sites losing their military presence.
Those being made available for disposal are: Craigiehall Barracks in Edinburgh; Claro Barracks, North Yorkshire; Howe Barracks, Canterbury; and Cawdor Barracks in Brawdy, Pembrokeshire;
Elements of Redford Barracks in Edinburgh, Forthside Barracks in Stirling, and Copthorne Barracks, Shrewsbury, will also go.
Around 11,000 British troops based in Germany will return home by 2016 under plans which will see nearly £2 billion invested in Army housing and bases. That is 70% of the total and ahead of the plan to have half out by that date.
The remaining 4,500 troops will be back in the UK by 2019, a year earlier than planned.
Around £1 billion of the funding being announced today will be go towards 1,900 new houses for service families and accommodation for 7,800 single soldiers. Another £800 million will be spent on infrastructure and refurbishment of bases.
Far fewer than originally anticipated of the returning troops will be based in Scotland, Mr Hammond confirmed - but insisted Scotland would still have "a little bit more than its fair share" of military personnel based on the size of its population.
Mr Hammond said: "By setting out our plans to bring troops back to the UK we are not only providing our service personnel and their families with greater stability for their future, but also generating a saving of around £240 million a year in operational running costs.
"We are going to invest an additional £1.8 billion in our new basing plan, providing investment around the country, crucial jobs for local economies and the best possible accommodation for our soldiers and their families.
"This work also supports and enables the Army 2020 structure, announced last year, which will ensure that the British Army remains the most capable Army in its class, adaptable and ready to meet the security challenges of the next decade and beyond."
He defended the decision to drop plans to double the size of the Army in Scotland - saying that had been based on a previous model of how the force would operate.
But he said Scotland had still secured a "very good outcome" as the overall military presence there was rising despite the cuts to personnel numbers.
Mr Hammond added: "It's also worth noting that if my calculator is correct, the proportion of our armed forces that will be based in Scotland at the end of this process is slightly higher than the proportion of the UK population that lives in Scotland.
"So, Scotland is getting its fair share or perhaps a little bit more than its fair share."
General Sir Peter Wall, Chief of the General Staff, said: "This announcement is very welcome news for the Army.
"The plan provides an excellent springboard for operations overseas and it affords welcome certainty over where people will live."
Wales Office Minister Stephen Crabb said the closure of the Cawdor Barracks - which Mr Hammond said was no longer "fit for purpose" - was "disappointing".
But he welcomed a £100 million investment in the St Athan base to which the 14th Signal Regiment (EW) unit is to relocate.
He added: "Whilst it is disappointing that we will see Cawdor Barracks in Brawdy, Pembrokeshire close, these changes are essential for our future armed forces.
"I am pleased that the defence footprint is largely being maintained and that 14th Signal Regiment will be relocating within Wales to St Athan.
"It is also expected that Wales specifically will receive much-needed infrastructure investment of approximately £100 million to support the rebasing."
Shadow defence secretary Jim Murphy told MPs: "There will be real disappointment at the closures across the UK today - from Canterbury, Ripon, Shrewsbury and Brawdy, where historic bonds are now being broken.
"You said that your disposal plans will bring in substantial receipts which have been factored in to future MoD budgets, but after the Government's 4G debacle you will forgive the public if they want and wait for more detail before taking that assertion at face value.
"On Scotland, the armed forces remain crucial to Scotland's future but today the Government has reneged on its promise.
"While there is positive news of the return of the Royal Scots Dragoon Guards and the Royal Marines staying in Arbroath, a previous pledge of thousands more troops to Scotland has become a plan for just hundreds.
"It is a real blow to Scotland and will not be forgotten."
Informing MPs about the closures, Mr Hammond said: "The local communities in each of these areas have been hugely supportive of the military presence over many years.
"The loss of historic ties will be much regretted and, on behalf of the army, I want to thank all those communities for their generous hosting.
"(This is) a plan that is driven by the army's requirement to generate military capability in the most effective and efficient way as it reconfigures for contingent operations, based almost entirely in the UK."
He said ministers would also continue to explore the possibility of selling off the Hyde Park Barracks which is home to the Household Calvary Mounted Regiment and is known to be a "prime development site".
But he said the plans would make it easier for troops to set down roots, telling MPs that the return of troops from Germany "marked the end of an era".
As part of the shake-up, which includes bringing all 16,000 British troops home from Germany by 2020, Mr Hammond said the Government planned to create seven regional centres for the army at Salisbury, Wiltshire; Catterick, North Yorkshire; Aldershot, Hampshire; Edinburgh and Leuchars; Colchester, Essex; Stafford, Staffordshire; and at Cottesmore in Rutland.
Mr Hammond added: "Consolidating around these seven centres will reduce the need for moves, giving army personnel and their families greater certainty about where they live and work, with real benefits in terms of increased stability, access to long-term spousal employment opportunities, continuity in schooling and the chance to set down roots and access the benefits of home-ownership."
Former Liberal Democrat leader Sir Menzies Campbell said the decision to remove RAF fighters from Leuchars was "operationally and strategically inept" and said Mr Hammond's announcement meant the number of troops who would replace the relocated airmen and women was "significantly less than promised before".
The Defence Secretary said a runway would continue to be maintained at Leuchars, with a contingent of RAF personnel. He said there would be no gap between the RAF leaving and Army arriving, which would take place in stages until the end of 2015.
The SNP's Westminster leader Angus Robertson said the announcement "marks the breaking of a raft of defence promises in relation to Scotland" which will leave fewer personnel in the country than before.
Mr Hammond said Scotland had 8.39% of the UK population but would be home to 8.65% of the armed forces as a result of the announcements.
Labour MP Sarah Champion (Rotherham) questioned whether the pull out from Germany would have implications for UK personnel in Cyprus and Northern Ireland.
Mr Hammond said: "None whatsoever is the simple answer.
"Withdrawal of our forces from Germany represents the logical conclusion of the ending of the Cold War some 20-odd years ago.
"Keeping a large standing force in Germany is expensive, it no longer serves the strategic purpose it did and as our Army becomes smaller, the dis-economies of scale of having, for example, two separate centres for armoured vehicle training and consequently two separate centres for armoured vehicle maintenance become unsupportable.
"So this is a logical, final, move in conclusion of the cold war era."
Liberal Democrat Bob Russell said he was pleased to see his Colchester constituency would remain vital to the Army.
On the announced funds for new service accommodation, he added: "Would you lift the moratorium on refurbishment of existing service accommodation?"
Mr Hammond said: "On the current refurbishment programme there has been some additional money provided by the Chancellor in the last budget and there is a programme of refurbishment that is continuing.
"This £1 billion is in addition to the baseline programme of DIO (Defence Infrastructure Organisation) maintenance and upgrading which has got a two year pause in it, partly ameliorated by the Chancellor's additional contribution."
Tory Crispin Blunt (Reigate) said: "If, like me, you were born in a British military hospital in Germany, lived there as a child, then served there as an adult in the British Army of the Rhine, the importance of this statement in personal terms can hardly be overestimated.
"As it charts the plan for the ending of the British Army of the Rhine, it is a very profound thing you have brought to the Commons today."
Scottish National Party Westminster leader and defence spokesman Angus Robertson said the U-turn on the numbers going to Scotland "betrayed communities who were told one thing just two years ago and now find that the MoD has broken its promises.
"The previous defence secretary Liam Fox said the return of army personnel was intended to help offset the loss of jobs at RAF bases and increase the defence footprint in Scotland.
"Today that has all gone up in a cloud of smoke.
"These U-turns, betrayals and broken promises show once and for all that Scotland defence needs are simply not met by Westminster politicians and that a 'Yes' vote in 2014 is essential to make Scotland's defence fit for purpose in an independent Scotland."
Secretary of State for Scotland Michael Moore said: "We are seeing £100 million of investment in military infrastructure and hundreds of additional soldiers coming to Scottish Army bases, bringing the total number to 4,000.
"It shows a deep commitment to Scotland as an integral part of our country's defence and should be welcomed.
"Those who criticise the decision today should not do so without offering a fully-costed and detailed plan of exactly how these figures would change if Scotland was no longer part of the UK.
"There has been a great deal of speculation from the Scottish Government on this issue but no hard facts."
Mr Hammond accepted that there would be "significant regret" and civilian job losses in all areas losing bases but said the investment would also create new opportunities.
"Of course we are very sensitive to the fact that many of our military units have very close connections with the communities in which they have often been embedded for long periods of time.
"There will be significant regret at the loss of those connections," he said.
"There will be some loss of civilian jobs; that is inevitable when you reduce the size of the Army. Equally, in some other areas where we are investing, there will be the creation of new civilian jobs.
"So there will be a mixed picture and we will engage in the usual way with the trade unions affected around the various different locations where we will be withdrawing."
He said the return of around £600 million a year presently being put into the German economy because of the presence of UK troops would be a "welcome shot in the arm for the UK economy".
General Wall said that ending the practice of regularly rotating where soldiers were stationed would help them develop deeper links with communities.
"It is going to stabilise the Army's presence in the UK and I think therefore for the first time for a long time the ability for our units to forge close relationships with local communities."
Some troops who had married Germans and had families would be "sad" to leave Germany, he noted, saying the Army had "greatly enjoyed living in Germany and it has been an excellent platform."
He insisted the loss of its training grounds would not adversely affect military readiness.
It "in no way detracts from our training plans for the future which I am confident will provide what we need", he said.
