Global peacekeeping commitments and the fight against terrorism have led to a radical rethink of government policy, the defence secretary has admitted.

In a speech on Tuesday, Geoff Hoon admitted that the US attacks had shown for the first time that terrorism could achieve strategic goals.

As a result Britain's military personnel would be facing new challenges.

"The only certainty in an uncertain world is the need for change. We are entering what I believe will come to be regarded as a key period of change for defence. There have been a number of such shifts in the past. We are on the edge of another," he said.

"The events of 11 September last year in the United States not only accelerated the pace of change; more significantly, they altered its nature in ways which, despite our best planning, we could never have anticipated."

He focused on emerging threats such as the proliferation of nuclear, chemical and biological weapons, terrorism and drug-related crime, environmental damage and possible attacks on technological centres.

"One assumption which was challenged by the events of 11 September was that there was no longer a direct threat to the UK. Quite clearly, there is."

The overriding theme was that the UK military is taking on an increasing role as peacekeepers and organisers of humanitarian aid as a "force for good", which was reflected in the MOD's settlement in the comprehensive spending review.

"We have found ourselves involved in more overseas deployments than we envisaged in recent years, even before the events of last September bought new challenges, so I am particularly pleased that this settlement also involves cash up front," said Hoon.

The review has been described by the MoD as an "unprecedented open re-examination of British defence requirements from first principles".

He pledged that the review would not become an excuse to cut costs or bring change simply to satisfy Whitehall demands.

"The changes that lie ahead must be properly thought through. There will be no change for change's sake. There is much that is excellent already and reform must be targeted where it is needed, rather than being a mantra applicable to everything," Hoon said.

The central aim is to create a "high capability, usable, cost- effective and, above all, battle-winning armed forces, based on highly skilled and highly motivated people".

Hoon said that, because modern conflicts can develop quickly, it was vital that Britain's military personnel were able to adapt.

"We need our Armed forces and those who support them to become more flexible, more readily deployable and inter-operable. In essence, we want to be certain that we can respond," he said.