The Royal Navy plans to reduce its flotilla of nuclear-powered patrol submarines to just seven - fewer than half of the number available at the time of the Falklands War - amid growing speculation over a swingeing new round of defence budget cuts.

The Ministry of Defence confirmed yesterday that current planning assumptions "envisage an attack fleet of seven submarines after 2022", but hedged its bets by saying that the figures remained "under review".

There are currently nine ageing Trafalgar and Swiftsure submarines available, with one due to be scrapped next year, although only four of the next generation Astute-class boats have so far been ordered to replace them.

The first of these was launched in June and a second is under construction.

The MoD claims that the advanced capabilities of the Astutes mean that fewer are required, but naval insiders counter by saying one submarine can only be in one place at a time, no matter how good its weapons and sensors might be.

In the meantime, despite denials by the MoD, Whitehall sources say the Treasury is demanding spending cuts of between £12bn and £15bn over the next 10 years to help underwrite the cost of the Navy's two new aircraft carriers, surface warships and the start of the Trident missile replacement programme.

The National Audit Office, Westminster's spending watchdog, warned last week that Britain's biggest weapons projects are predicted to be overspent by £3.5bn, more than 10% of the entire annual defence budget.