Zu Guttenberg said he was in favour of a reform proposal that would slash troops levels from 252,000 today to 165,000 in the future.

The result would be a "smaller but better army, more effectively equipped for operations," the minister told reporters in Berlin after meeting parliamentary leaders to present the controversial plans.

Under the plan, Germany would retain conscription in its constitution but only accept recruits who volunteer to join the military -- estimated at around 7,500 people per year.

The minister said he wanted to retain the principle of obligatory military service in the country's Basic Law "because who can say what the situation will be in 20 or 30 years?"

According to official figures, NATO member Germany has almost 63,000 conscripts. Berlin recently cut the length of compulsory military service to six months from nine months.

Zu Guttenberg came under fire from within his own conservative bloc earlier this month for suggesting that conscription should be phased out altogether, reportedly prompting him to threaten to resign.

Conscription has been a venerable institution in postwar Germany, seen as an effective guarantee that the military would never again fall into the hands of a power-hungry elite as it did in the Nazi period.

But opponents argue the system is outdated, costly and inefficient.

Germany, chastened by the crimes committed by its military during World War II, was slow to join international deployments abroad but now has the third largest foreign contingent in Afghanistan behind the United States and Britain with some 4,500 troops.

In June, Chancellor Angela Merkel pledged more than 80 billion euros (101 billion dollars) worth of cuts by 2014 including a 8.3-billion-euro decrease in defence spending.

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