French President Nicolas Sar-kozy announced an overhaul of his country's military yesterday to create a smaller and more mobile army, committing Paris to closer ties with Nato and a stronger European defence policy.

Outlining France's strategic defence priorities for the next 15 years, Mr Sarkozy said the military must put new emphasis on security within France's borders and adapt to modern challenges from terrorism to computer attacks.

He also urged a strong European defence policy and said France would revamp ties with Nato, with which it has had an ambivalent relationship since former President Charles de Gaulle pulled out of the alliance's military command structure in 1966.

To free up funds to modernise its ranks, France would slash 54,000 mostly administrative and support posts over the coming seven years, leaving a force of 225,000 including civilians.

Acknowledging budgetary constraints had forced France to make tough choices, Mr Sarkozy pledged to push contested reforms through to the end as France maintained its status as a major military and diplomatic power.

"We have to make choices and we need to look at the situation as it is," Mr Sarkozy told an audience of officers and senior security officials.

"The truth is that we must stop trying to maintain certain materials that you use every day on a shoe string - supply planes which are 45 years old, light armoured tanks which are 28 years old and Puma helicopters which are 30 years old," he said.

Defence spending would rise in line with inflation in the near-term and grow above it from 2012, with €377 billion earmarked for the military between now and 2020, of which €200 billion would go to equipment, he said.

France would hold on to nuclear deterrence as a cornerstone of policy and maintain a sizeable deployable troop capacity for operations abroad, albeit reduced to 30,000 from 50,000.