Prime Minister Boris Johnson will on Thursday unveil what is being billed as Britain's biggest programme of investment in the armed forces since the end of the Cold War.
In a speech to lawmakers in parliament, Johnson will announce an extra £16.5 billion ($22 billion, 18.5 billion euros) in funding over the next four years.
It follows the ruling Conservatives' commitment in their election manifesto last year to increase defence spending by 0.5 percent above inflation until 2025.
Johnson's Downing Street office said the cash boost would "cement the UK's position as the largest defence spender in Europe and the second largest in NATO".
It comes despite Britain's economy suffering a historic downturn this year due to the coronavirus crisis, which has seen the government spend unprecedented sums to support people and businesses.
"I have taken this decision in the teeth of the pandemic because the defence of the realm must come first," Johnson said in remarks released ahead of his speech.
"The international situation is more perilous and more intensely competitive than at any time since the Cold War and Britain must be true to our history and stand alongside our allies."
He added the new funding was "our chance to end the era of retreat" and that it would be used to "upgrade our capabilities across the board".
Britain's increase in military spending, which will total £24.1 billion ($31.8 billion, 26.9 billion euros) over four years, comes at a pivotal moment for the country.
After formally leaving the European Union in January, it will end the 11-month Brexit transition period at the end of the year and begin a new era in international trade and relations.
Meanwhile US President-elect Joe Biden will take power in late January, with trans-Atlantic allies hoping that marks a more stable period for NATO after the tumult of the Trump years.
Newly appointed United States acting defense secretary Christopher Miller hailed the move Wednesday evening.
"The UK is our most stalwart and capable ally, and this increase in spending is indicative of their commitment to NATO and our shared security," he said in a statement. "With this increase, the UK military will continue to be one of the finest fighting forces in the world."
Increased UK military investments will target "cutting-edge technology", including cyber and space capabilities, while also addressing "weaknesses in our defence arsenal", Downing Street said.
Johnson will announce a new agency dedicated to Artificial Intelligence, the creation of a National Cyber Force and a new "Space Command", capable of launching its first rocket by 2022, it added.
Meanwhile, after a boost of £1.5 billion ($1.9 billion, 1.6 billion euros), nearly £6 billion ($7.9 billion, 6.7 billion euros) will be spent on military research and development, including on upgrading aerial warfare systems.
Defence Secretary Ben Wallace said the settlement provided the "financial certainty we need to modernise, plan for the future and adapt to the threats we face".
"Defence will be at the forefront of creating the jobs and business opportunities that will help us build back from the pandemic," he added.
Copyright AFP. All rights reserved.