PHILIP Hammond has fired a warning shot across the Chancellor's bows over more cuts to the £34 billion-a-year defence budget, which he claims could endanger Britain's military capability.

The Defence Secretary made clear that the cuts now being demanded of the Ministry of Defence were of a "different order" to those which have already happened, and suggested they could have an impact on the UK's ability to undertake future operations.

"We should be very clear that there is a difference between efficiency savings, which may be difficult to achieve but are painless in terms of the impact on the front line, and output cuts, which are of a very different order and require proper and mature consideration across Government about the impact that they will have on our military capabilities," he said.

The Secretary of State insists he understands the problems George Osborne faces in cutting the national deficit and is not a "hold-out", resisting cuts to his department.

But he said that after a review of MoD spending is completed in a couple of weeks' time, he hopes to have an "adult conversation" with the Chancellor about where the axe could fall.

Defence procurement is protected in 2015. The rest of the defence budget is not, however, and, unlike other departments, the MoD is being asked to save 5%, not 10%.

Treasury sources confirmed the £11.5bn cut in spending for 2015 would mean a reduction in Scotland's block grant for that year of "hundreds of millions" of pounds.

Stewart Hosie, the SNP's Treasury spokesman, said: "This latest bombshell shows that a No vote means years more Westminster cuts."