THE Ministry of Defence is drawing up emergency cuts including the scrapping of the Officer Training Corps (OTC) and the withdrawal of troops from Cyprus.

The dire state of the defence budget also means that new Nimrod spy planes, costing £3.6 billion and due to come into service next week, will be parked in their hangars.

Other cuts, expected to be unveiled in the next two months, include:

- Closing up to three airbases.

- Reducing the £700m annual bill for army accommodation by giving soldiers housing credits to buy or rent property.

- Axeing the grace and favour homes provided to 20 army, navy and air force chiefs.

- Closing Aldershot and Shrewsbury, two of the army’s five regional headquarters.

- Privatising parts of the Royal Fleet Auxiliary, the organisation that repairs and supplies naval vessels.

Disclosure of the cuts comes amid fierce wrangling between General Sir David Richards, the head of the army, and Admiral Sir Mark Stanhope, the head of the Royal Navy, over which service should suffer the most.

MoD officials are drawing up savings in current spending ahead of the budget in March, which is expected to demand reductions in defence spending in real terms.

Capital projects such as new aircraft carriers and the joint strike fighter will be considered in a separate strategic defence review, which will be launched after the general election.

The OTC, the cadet scheme for students, costs £82m a year. A defence source said: “Very few private companies spend this kind of money on graduate recruitment. It is an expensive luxury a modern army can do without.”

Founded in 1908, it has long been unpopular with left-wing politicians who see it as a subsidy for the privileged. Its bases, at 19 universities, serve cheap drink and teach military drill, weapons training and fieldcraft. While some officer cadets go on to Sandhurst or join the Territorial Army, the majority have no further contact with the military.

Withdrawal of forces from Cyprus, where 3,000 British troops are based, would be controversial. Britain’s “sovereign base areas”, which cost the MoD about £300m a year, were created when the island gained independence in 1960.

Cyprus is used by British troops as a forward base, with a battalion of infantry held there as reinforcements for Afghanistan, and troops returning from the front line are taken there for rest and recuperation between operations.

Officials believe about £100m could be saved if most of the troops are moved back to the UK. “The practice of using Cyprus is long-standing, but no one has stood back and asked whether it is still a good idea,” a defence source said. “Many soldiers don’t regard Cyprus as a jolly, but would rather be back home if not on the front line.”

The RAF base at Akrotiri and Britain’s electronic listening base at Ayios Nikolaos will be retained.

Aldershot has an even firmer role than Cyprus in military logistics; it is regarded as the home of the British Army. But Richards believes that the regional divisional headquarters there and in Shrewsbury are largely unnecessary. Sources say he also had his eye on the regional headquarters in Edinburgh, which survives for political reasons. Two other regional HQs — Bulford, near Salisbury, and York — will remain.

Nine new Mk4 Nimrod reconnaissance aircraft were due to come into service next week, replacing the discredited Mk2. But Quentin Davies, the defence equipment minister, has cancelled a visit to the Nimrod base at RAF Kinloss, Morayshire. Sources blame the £30m annual maintenance costs.

“We expect to have only one or two aircraft flying until 2012 and the rest are going to be parked up until we can find some money to fly them,” an RAF source said.

Mk2 Nimrods were used in Afghanistan, where the crash of one led to charges that it was a flying coffin; but the Mk4 is planned for maritime surveillance. Originally, 21 were due to come into service in 2001 for £2.2 billion. Time and cost both overran drastically as the manufacturer, BAE Systems, ran into design problems.

A spokesman for the MoD said: “We regularly review the defence programme to ensure our commitments match the resources available.”