David Cameron is to meet senior ministers and officials in a fresh attempt to agree where the spending axe will fall on Britain's beleaguered armed forces.
The Prime Minister will chair a meeting of the National Security Council (NSC) in Downing Street to consider the strategic defence and security review (SDSR) amid continuing tensions between the Treasury and the Ministry of Defence.
Following a meeting last week officials were sent away to do more work, with the MoD under pressure to come up with major cuts to a defence budget which is already heavily underspent.
It later emerged that Defence Secretary Liam Fox wrote to Mr Cameron complaining that the SDSR process was becoming "less and less defensible" and warning of the "grave consequences" of imposing "draconian" cuts on the military.
The Prime Minister subsequently declared his commitment to maintaining strong armed forces insisting that Dr Fox's fears were "unfounded".
In his speech on Wednesday to the Conservative Party conference in Birmingham, he again declared that he would take "no risks with British security", while acknowledging that the forces faced "big changes".
Nevertheless key issues still have to be resolved in what is proving to be the most difficult element of the Government's overall comprehensive spending review to be announced on October 20.
One major decision is whether to press ahead with the Royal Navy's programme to build two new aircraft carriers at a cost of more than £5 billion. There is speculation that one boat could be axed - although that could cost more than £1 billion in cancellation fees - or built and then put on "extended readiness" - effectively mothballed - drastically reducing the running costs.
The NSC will also have to decided to go ahead with the planned full complement 138 of American-built Joint Strike Fighters which will equip the carriers, with reports suggesting that the order could be halved, saving around £7 billion.
It is already clear that the RAF looks set to lose significant numbers of its fast jet fighters - increasing seen as a relic of the Cold War era. In contrast, the Army - which remains heavily committed to operations in Afghanistan - appears to have won its battle to stave off significant cuts to troop numbers.