The armed forces are to be reorganised to focus on countering new terrorist threats, the defence secretary has said.

In what was billed as the most far-reaching set of changes since the 1998 strategic defence review, Geoff Hoon said force structures must match the new threats of the post-September 11 world.

Armed forces could in future expect to be used against a "determined, mobile, often disparate and elusive enemy", Hoon said.

"We must be able to get the right forces quickly to where we need then, make better use of intelligence to identify the threat, decide how to deal with it and then strike decisively."

The new policy would be one of "detect, decide and destroy", Hoon told MPs. "It means being able to strike hard and fast, cutting down the enemy's time to think, plan and act."

There would be resources available to fund current commitments and the new white paper was focusing on long term challenges.

The government was committed to "strong defence", said Hoon, pointing to the announcement that the Ministry of Defence budget will rise from £29.3 billion this year to £32.8 billion by 2005/06.

The armed forced had two key roles in tackling terrorism, home defence and action overseas.

"While assisting in the defence of the United Kingdom is a key element of this campaign, long experience indicates that a wholly defensive posture will not be enough.

"Terrorism thrives on the element of surprise, and one of the key ways to defeat it is to take the fight to the terrorist.

"We must be able to deal with threats at distance, hit the enemy hard in his own back yard, not in ours, and at a time of our choosing not his. Acting always in accordance with international law," said Hoon.

There were three roles for the armed forces in the modern world, said Hoon. These were stabilisation operations such as ISAF in Kabul, tackling terrorism in rogue states, and conducting find and strike operations such as those against Al Qaeda and the Taliban in Afghanistan.

"We recognise that in future we may have only fleeting opportunities to strike at the enemy."

Those spotting targets and those shooting the weapons would need to be better linked by new technology, said the defence secretary.

There would be extra investment in network technology and the UK's Watchkeeper programme of unmanned air vehicles, aimed at improving operational effectiveness, would be accelerated.

There would also be an examination of the better use of support helicopters.

The government is also looking at the use of more rapidly deployable light forces to tackle terrorists operating in remote areas.

Reports have suggested that the reforms could see the abolition of up to three regiments of heavy Challenger 2 tanks and the merger of a number of other units.

"There has already been some speculation about what this work might mean for the structure of the armed forces. Can I emphasise that this work is focussed on ensuring we have the capabilities that we require.

"This will probably need some adjustments to slightly rebalance the force structure but certainly there have been no decisions about any specific changes."

There would also be strengthened relationships between the armed forces and civilian authorities to deal with emergency planning.

Reaction forces of around 500 reservists will be established in all 11 areas of the country, with some five to six thousand individuals committed to turn out at short notice.

Air defences were also being improved to deal with the threat from rogue aircraft.

Hoon said the reforms would not put excessive demands on armed forces personnel. "The needs of our people are a top priority for us."