New defence secretary Gavin Williamson has privately expressed shock at the extent of cuts due to be imposed on the MoD by the Treasury.
Mr Williamson has been told he must find a way of reducing the defence budget by £2 billion a year.
The Ministry of Defence has dismissed speculation over the nature of the planned cuts, but the government faces a backbench rebellion from angry MPs.
Defence Secretary Gavin Williamson was said to be shocked by the ‘completely awful’ headline proposals drawn up by military chiefs
One Whitehall source told The Times that Mr Williamson is trying to prevent the army’s decimation.
The source said: ‘Gavin is aware he has a huge challenge on his hands. He does not like what he came into . . . We are beginning to try and push back.
‘Britain would risk becoming a global laughing stock at a time when we need defence to be our strong card post-Brexit.’
The army has a target strength of 82,000, but it is now at 77,440 and could shrink to below 70,000.
Such is the anger within the Conservative Party to the proposed cuts, one defence minister, Tobias Ellwood – who battled to save a Westminster terror attack victim – has threatened to resign if cuts are imposed on the Army.
Other measures thought to be under consideration include reducing the order for Ajax armoured vehicles and delaying upgrades to other tanks.
Mr Ellwood, who served in the Royal Green Jackets from 1991 to 1996 with tours in Northern Ireland, Cyprus, Kuwait, Germany, Gibraltar and Bosnia and is now in the Army Reserve, has indicated he would have to step down if the military was not shielded from the proposed reductions, the Times said.
Asked if Mr Ellwood was known to have concerns about the prospect of cuts, a senior defence source said: ‘Absolutely.’
Speculation about defence cuts has mounted in recent months since the launch of a review led by Theresa May’s national security adviser Mark Sedwill.
Other options reportedly under consideration include the axing of amphibious assault ships HMS Albion and HMS Bulwark, alongside the loss of 1,000 Royal Marines.
Mr Ellwood was pictured coming to the aid of police officer Keith Palmer after he was fatally stabbed by Khalid Masood during the Westminster attack
An MoD spokesman said: ‘We have the biggest defence budget in Europe and are one of very few countries to not only meet but exceed NATO’s 2 per cent spending target.
‘In the face of intensifying threats, we are contributing to the cross-government review of national security capabilities and looking at how we best spend the rising defence budget to protect our country.
‘No decisions have been made and any discussion of the options is pure speculation.’