Defence Secretary Philip Hammond has warned he will resist further cuts to the armed forces in Chancellor George Osborne's forthcoming spending review.
After Downing Street said publicly last month that the military would not be immune from further financial retrenchment, Mr Hammond has vowed to fight against anything more than modest "efficiency savings".
He said other Conservative Cabinet ministers believed that the greatest burden of any cuts should fall on the welfare budget.
A Whitehall source said Mr Hammond's comments were aimed particularly at the Lib Dems following remarks by senior Lib Dem ministers indicating that they believed welfare spending should be protected over defence.
In an interview with The Daily Telegraph, Mr Hammond said there was a "body of opinion within Cabinet who believes that we have to look at the welfare budget again", and that "we should be seeing welfare spending falling" as a result of rising employment levels.
He later told the BBC: "We won't be able to make further cuts without eroding military capability.
Mr Hammond says the welfare budget should be curbed instead "Of course I understand the Chancellor's challenge. He has to find additional savings in order to consolidate the public finances as we have to do but we need to look broadly across Government at how we are going to do that, not just narrowly at a few departments."
He said the "first priority" for the Government should be "defending the country and maintaining law and order" and that further defence cuts were not possible while meeting stated security objectives.
"I shall go into the spending review fighting the case for the defence budget on the basis that we have made very large cuts to defence, we've done that with the collaboration and co-operation of the military," he told the newspaper.
"Any further reduction in the defence budget would fall on the level of activity that we were able to carry out - the idea that expensively bought equipment may not be able to be used, expensively employed troops may not be able to be exercised and trained as regularly as they need to be.
"I am not going into the spending review offering any further reductions in personnel."
Mr Hammond's comments are likely to be welcomed by Tory backbenchers who have been calling for a return to core Conservative values in the wake of the party's trouncing in the Eastleigh by-election.
However they will also heighten tensions within the coalition, with the Liberal Democrats resisting a further squeeze on welfare spending.
Sky's Defence Correspondent Alistair Bunkall said: "Philip Hammond's words are significant for two reasons: he's clearly saying to the Lib Dems 'enough is enough' and by so blatantly suggesting that the British armed forces would be unacceptably weakened if subjected to further cuts, he's drawing a line that would be dangerous to cross."
Former Defence Secretary Liam Fox also waded into the issue, saying national debt was a "threat" to Britain's national wellbeing.
"The size of our national debt and the interest payments that come from it are a long-term strategic threat to our national well-being.
"We must look to other areas, especially our huge welfare budget, for the savings that we simply have to find. We cannot cut spending on our national security while continuing to spend on what are, ultimately, discretionary domestic programmes."
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