A reduction of at least 12,000 personnel in the British Royal Navy fleet and manpower across all three services of the armed forces would be announced on Wednesday as part of the government's defense strategy, the Financial Times newspaper reported.

British Defense Secretary Geoff Hoon, who was expected to make the statement to the parliament, would justify the cuts as part of a move towards a more streamlined and flexible armed forces capable of reacting to the evolving threats of international terrorism and failing states and to the peacekeeping commitments both at home and abroad, the report said.

Hoon would also highlight the benefits of an increase to the defense modernization fund to 1 billion pounds (about 1.86 billionUS dollars) over the next three years to support the modernization of logistics and defense information infrastructure, Whitehall officials were quoted as saying.

According to the report, the defense strategy was expected to commit itself to some of the new programs, such as two new aircraft carriers, the Joint Strike Fighter aircraft, and the Astute attack submarines. The cuts would include some of the oldest Type 42 and Type 23 ships.

British Chancellor of the Exchequer Gordon Brown last week announced that the budget for the Ministry of Defense would be increased by just 1.4 percent annually in real terms and he also demanded 2.8 billion pounds (about 5.20 billion US dollars) in savings on equipment procurement and back-office support by 2007/08.