More than 11,000 troops currently based in Germany will return to Britain within three years as part of a major restructuring of the army that will require ministers to spend £1bn on new military homes.
The announcement on Tuesday marks a sharp acceleration of the withdrawal of British forces in Germany, which have been stationed there since the end of the second world war.
However, Philip Hammond, the defence secretary, will provoke anger by announcing to MPs the closure of some smaller UK military bases, so the army can rebuild itself around seven major regional hubs.
The Scottish National party (SNP) will also be angered that only 600 of the soldiers returning will be stationed north of the border. That is a 20% increase on current numbers, but the SNP had hoped for thousands more.
The announcement should set out in detail how the army will manage the historic drawdown from Germany, where the British still have bases in 11 garrison towns, including Bielefeld and Paderborn.
Initially, the Ministry of Defence had proposed pulling troops out of Germany by 2020. But those plans, set out in the 2010 Strategic Defence and Security Review, had to be revisited because of further cuts to the defence budget.
Hammond will say that 11,000 soldiers will leave Germany by 2016, and the remaining 4,500 will come home in 2019. In addition, the MoD has to provide for the 17,000 relatives and support staff who are also currently in Germany.
The influx will mean the MoD has to spend £1bn on new accommodation – 1,900 family homes will be built, and 7,800 single rooms in new living quarters. Another £800m will be spent on refurbishing existing bases.
With the army currently running 20 schools in Germany for the children of military staff, enormous strain could be put on local schools after the relocation.
An MoD source said the withdrawal would save the military £240m a year, and that the money for house-building should boost growth: "This will not only provide a boost to the economy, but also see the soldiers and their families benefit from new and upgraded accommodation.
"This plan will provide much greater certainty for forces' families and actually deliver the pledge to bring the army home from Germany much earlier than first planned. The army's plan will make it much easier for units to work and train together across the country."
The seven regional army hubs are likely to be focused at existing bases near Salisbury Plain, Aldershot, Colchester, Stafford and in the east Midlands. There will be two more in Scotland – in Edinburgh and Fife.
Prof Malcolm Chalmers, a defence expert at the Royal United Services Institute thinktank, said the announcement was linked to job losses that will shrink the army by a fifth to 82,000.
"The head of the army has talked about doing most of these cuts by 2015. That opens up the possibility of bringing back the troops from Germany by 2016. They know what the size of the army will be and can plan around it in terms of how many homes to build," he said.
Jim Murphy, the shadow defence secretary, said: "The country will welcome troops returning from Germany but will want further details. People will need to know whether cuts are being made elsewhere to fund the investment in returning troops.
"The impact of such large numbers returning to local communities, in particular on housing and local services, may be enormous and people will want evidence ministers have plans to support families and local authorities. The country should be told of the impact of repeated changes to army structures and increased army job losses. There has already been a loss of military units and bases and there must be no smoke and mirrors over further closures."
On Monday Downing Street appeared to dismiss a call from Hammond for welfare to bear a greater share of any further cuts in the forthcoming spending review, saying this budget had already been squeezed.
The basing review was due to report at the end of last year, but was delayed – infuriating the SNP, which fears the MoD will backtrack on commitments made by the former defence secretary Liam Fox.
Fox promised that between 6,500 and 7,000 personnel would return to Scotland and be part of a new multi-role brigade, new barracks would be built in West Lothian and a new training area would be established in the Borders.
Since then, further cuts have been made to the size of the army, and Hammond has demanded new spending restraint across the department.
An MoD source said: "There will be an increase of several hundred in overall numbers of armed forces personnel in Scotland against a backdrop of a reducing size. Although the location of the armed forces is decided purely on military requirements, even by the SNP's argument of a 'fair share', the number of Armed Forces in Scotland will be roughly proportionate."
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