Government has been accused of "slashing" the Army after it confirmed the regular force would be cut to its smallest size since the Boer War.
Defence Secretary Liam Fox said the Government would be investing £1.5 billion in the reserves over the next 10 years, building up the Territorial Army (TA) as the regular force declines.
In a Commons statement, he told MPs that he ultimately envisaged a total force of around 120,000 with a ratio of around 70% (84,000) full-time regulars to 30% (36,000) part-time TA.
That compares with a current regular Army of more than 100,000 with around 14,000 reservists.
Dr Fox said that the changing balance would bring the UK more into line with comparable countries such as the United States, Canada and Australia.
The Vice Chief of the Defence Staff, General Sir Nicholas Houghton, who led a review of the reserves, said the changes would mean the armed forces would be better configured to meet the challenges of the future.
Defence officials said on Monday that Bernard Gray, the new head of MoD procurement, had identified an additional £5bn worth of underfunded liabilities.
The army will be centred around multi-role brigades, with 19 Light Brigade based in Northern Ireland broken up with some of its constituent parts – including The Black Watch – assigned to other brigades.
RAF Leuchars will close, leaving RAF Lossiemouth as the only remaining air force base in Scotland. Leuchars will become an army barracks housing some of the 20,000 British troops who are due to leave Germany by 2020, Fox announced. Most of the changes will take place after 2015, when the next general election is due, Fox said. He described it as "an incredibly complex decision and it has inevitably been a balancing act".
The shadow defence secretary, Jim Murphy, described the government's announcement as "strategic shrinkage by stealth". He told Fox: "The army has been slashed to cover up the funding gaps left by the rushed defence review."
Fox had announced cuts to the army of 19,000 – just under a fifth of the entire force – in just 10 months, he said. When in opposition, the Conservatives had promised thousands of extra troops, Murphy said.
General Sir David Richards, chief of the defence staff, said in a statement: "If we get it right, this will result in a modern, hard-hitting joint force still capable of operating at the divisional level across the full spectrum of conflict. It will deliver armed forces of which we can all be proud."
The National Audit Office, parliament's financial watchdog, for the fifth year running, said it could not approve the MoD's accounts. It said £5.3bn worth of assets could not be accounted for, including more than 4,000 Bowman radio sets used for secure communications.
Fox's statement came as the MoD announced that a British soldier from 1st Battalion The Rifles was killed in an explosion in Nahr-e Saraj district of Helmand province in Afghanistan.