THE Ministry of Defence tried to conceal the spiralling cost of major procurement projects over the past two years by switching funds between different accounts to give the impression that the process was under control, according to a scathing new Whitehall watchdog report.

But the need to slash other planned spending to compensate for "juggling the books" had now created the risk that British soldiers on the frontline inAfghanistan could eventually run short of certain types of fire-support ammunition, the report claimed.

About £1bn had been removed from the bill for major equipment purchases since 2006 by reallocating the sums to other budgets, the Commons Public Accounts Committee said.

MPs also complained that parliament was not being given the full picture of the overall bill as a result of defence officials' sleight of hand over accounts.

The knock-on effect could now force other parts of the MoD to cut back on items such as training or stocks of spares and ammunition to balance accounts by reducing outlay on core activities.

The committee said the situation had arisen because the ministry was struggling to afford all the equipment it wants or needs to buy.

Chairman Edward Leigh said: "The department must address the systemic weaknesses underlying cost increases and delays. There is a conspiracy of optimism' in the department and industry leading to the acceptance of unrealistically low estimates of the cost of bringing major equipment into service."