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"If we do not strengthen Nato by reinforcing its European pillar, not just on defence but on wider security issues, the result will be neither the status quo nor some other fantasy of wider collective security co-operation," it warns.
"There will be a future crisis that leaves us vulnerable to shifting American interests and opinion, relative US decline and European disunity and weakness, when Nato's political glue fails to hold and Europe is left more exposed than at any time since the second world war. It is delusional to believe some other solution is viable."
Weapons projects totalling at least £24bn should be reviewed "with a view to making cuts", says the IPPR commission, chaired by the former Labour defence secretary and ex-Nato secretary general Lord Robertson, and the former Liberal Democrat leader Lord Ashdown.
"Fundamental choices are necessary. The attempt to maintain the full spectrum of conventional combat capabilities at the current scale has produced acute strains on resources and, increasingly, on operational effectiveness. It cannot be sustained," they say.
They recommend a defence review should look at the £3.9bn project to build new aircraft carriers and the plan to equip them with US joint strike fighters at a cost of £10bn, the navy's destroyer and nuclear-powered, conventionally armed, submarine programmes, the army's main battle tanks and the RAF's Tornado and Eurofighter-Typhoon aircraft.
Special forces should be increased "to deal with a Mumbai-style attack in the UK", and there should be a "civilian-military stabilisation and reconstruction force to operate in dangerous post-conflict environments".
The IPPR commission argues that "in prevailing world circumstances, the UK should maintain a minimum credible independent deterrent".
It said a full and transparent review of the existing deterrent was needed, including a look at options to avoid the need for renewing Trident.
The value of replacing the nuclear missile system is being increasingly questioned throughout Whitehall. Its relevance and cost at a time when the defence budget is under severe pressure is leading more officials, including many military chiefs, to argue the Trident system is simply not worth replacing.
Defence officials say the decision whether or not to go ahead with a replacement is political, not military.
Independent and government defence officials say any credible replacement would have to be submarine-based and consist of long-range ballistic missiles.
Some argue a full fleet of three or four new state-of-the-art submarines is not necessary, but the more likely outcome is a postponement of the decision.
The government says it will have to agree an initial contract for the design of the proposed submarines as early as September, when parliament is not sitting. The Liberal Democrats, and some independent analysts, say that decision could be put off for more than a year.
Ministers admit Britain is not threatened now by any nuclear-powered state and its enemies are international terrorists who, according to experts, are unlikely to be deterred by a country with long-range nuclear missiles but whose commanders would be unsure who to target, or how.
Bob Ainsworth, the defence secretary, said yesterday that MPs had voted in favour of renewing Trident in December 2006."There were decisions that were talked about at the time that would need to be taken on future occasions," he said.
"There is still a long way to go in Afghanistan," he told the BBC, claiming the priority was to ensure the Afghan national election in August was "credible".
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