High-ranking armed forces personnel will be sacked to slash bureaucracy, the defence secretary has warned.

Generals, admirals and air marshals face the axe as the government sets out to reduce “the star count”.

Dr Liam Fox said he wanted to see "new career structures" and "better streamlined management" in the military because over-complicated decision-making had "bedevilled" the UK's defence for many years.

Dr Fox said: "There is a very strong case for reducing the star count in the Armed Forces to create space for those coming up the ranks."

He fired the latest salvo amid a bitter public exchange of views between senior politicians and military chiefs, which has seen leading figures in the Royal Air Force, Royal Navy and Army all question Britain’s ability to conduct wars in Libya and Afghanistan with a diminishing budget.

Dr Fox said: “In a war you have got to be careful of the messaging you give to the other side.

“There is a time and a place for anyone in the Armed Forces to give ministers a message and they have a much greater chance of success in delivering it in the appropriate manner.”

His comments came hours ahead of an official review due today, which will report that the “bloated and dysfunctional” Ministry of Defence leaves ministers “in the dark” about key decisions.

Research carried out three years ago showed that admirals outnumbered warships in the Royal Navy.

The findings give leverage to a report by Lord Levene’s defence reform unit, which will call for a sweeping overhaul of the structure and management of the MoD, saying that military chiefs must be made accountable for their own budgets.

In a speech, Dr Fox will say that Lord Levene has found that he leads a “department with overly bureaucratic management structures, dominated by committees that led to indecisiveness and a lack of responsibility”.

The unit is particularly critical of the Defence Board, the MoD’s top decision-making body, which includes senior officials and the heads of the three Armed Forces, but no politicians.

“A bloated top-level defence board without ministerial membership allowed strategic decision to drift, unable to reconcile ambition with resources,” Dr Fox will say.

He will add that the board has left “budget holders without the levers needed to deliver and ministers in the dark”.

In response, the individual heads of the Navy, Army and Royal Air Force will lose their seats on the board, but the Chief of the Defence Staff will remain.

Under current practice, the heads of the three services follow relatively narrow career paths, with the Army almost always led by a former infantry commander and the RAF by a former fast jet pilot.

Under the changes suggested by Levene, officers with experience from outside their service’s core activity could compete for the top jobs. That could eventually allow a Royal Marine to become head of one of the services for the first time.

Dr Fox will confirm a report in The Daily Telegraph on Saturday that the defence budget still faces a multibillion-pound deficit that could force him to make more cuts in the Forces.