The cost of fuelling Britain’s Armed Forces is due to rise by more than £500 million next year as a result of soaring oil prices, forcing military chiefs to consider broad cuts to air force and combat training.

Ministry of Defence calculations of projected fuel bills, seen byThe Times, show a dramatic increase in operating costs, with fuel for aircraft, naval and ground vehicles up by more than 20 per cent on last year.

With the Armed Forces’ budget set to rise by just 3 per cent – and the Chancellor, Alistair Darling, warning government departments last week of no additional increases – defence and industry analysts said that major cuts to training programmes such as fighter plane exercises would be inevitable.

The Times understands that Air Chief Marshal Sir Glen Torpy, Chief of the Air Staff, told senior members of the defence industry last week that RAF pilots would do more training in simulators this year because of the budget squeeze.

He is understood to want to link simulators in cyberspace so that pilots can take part in “virtual” missions since “real-life” exercises were becoming unsustainable because of the cost of deploying aircraft.

Liam Fox, the Shadow Defence Secretary, called for government assistance to the Armed Forces to cope with the additional unexpected shortfall, which was revealed in a written parliamentary answer to the Conservative frontbencher. He is expected to grill Des Browne, the Defence Secretary, today during parliamentary questions.

“It is essential that the Government do not take the easy option of cutting training, because that can only put our forces at risk when they go into combat,” Mr Fox said.

“Rising fuel costs will put even greater pressure on the already overstretched MoD budget. This comes at a time when our troops are already short of equipment and this will make a bad situation worse.”

The news comes as Gordon Brown is expected to make a statement to the Commons tomorrow in which he will update MPs on Britain’s military commitment in Iraq, including a possible timeframe for the withdrawal of British troops.

According to Ministry of Defence planning assumptions for 2008-09, the fuel bill will rise to £2.9 billion from just under £2.4 billion last year.

The MoD said yesterday that it would absorb the higher cost of fuel used in Britain, despite the Treasury already borrowing record amounts to meet its existing Armed Forces spending commitments. Fuel used in Iraq and Afghanistan would be paid for by the Treasury.

An MoD official said that the department was unable to say at what price the fuel assumptions had been made. Given that oil has nearly doubled in the past 12 months to more than $130 a barrel, the assumptions could already significantly underestimate the true cost of fuel use this year.

He said that, beyond overseas operational fuel costs, the remaining costs were managed within the £34 billion defence programme and “do not affect the MoD’s ability to deliver military capability, home or abroad”. He added that the MoD was committed to making savings worth £2.7 billion between 2008-09 and 2010-11.

Experts said that it would be impossible to meet the rising costs of fuel without drastic cuts to the training budget. Some equipment may even be mothballed until the price of oil falls.

“I cannot see how the MoD can do anything other than cut training,” Patrick Mercer, the Conservative MP for Newark and the party’s former spokesman on homeland security, said, adding that the figure of £500 million was likely to be higher now given the rise in oil prices. Mr Mercer said measures typically taken in the past included “track mileage limitations” that cut back on the number of training miles for the more gas-hungry vehicles such as tanks. Similar caps are placed on helicopters and fighter jet training, he said.

Howard Wheeldon, senior strategist with BGC Partners and a respected defence analyst, said: “To absorb that sort of cost will have to involve substantial slimming down of the more expensive types of training, such as major flight, ground and naval exercises.”

The MoD is particularly vulnerable to the rising price of oil as its equipment generally uses huge quantities of fuel. Tanks, armoured trucks and transport planes are all much heavier than vehicles used in civilian life and therefore burn more fuel.

Fighter jets are lighter than commercial aircraft but travel three or four times faster and therefore use substantially more fuel.

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