The Armed Forces had to make cuts every year while troops were fighting in Iraq and Afghanistan because Gordon Brown did not provide sufficient funding, the military’s top civil servant said yesterday.

Sir Bill Jeffrey told the Iraq inquiry that the military had been left with “significant” financial problems when Mr Brown ordered cuts six months after the start of the campaign.

The comments came three days after the Prime Minister told the inquiry that as Chancellor he had never turned down any request to buy military equipment for the campaign in Iraq. Sir Bill, Permanent Secretary at the Ministry of Defence since November 2005, said however that ministers were forced to seek “cuts” because the defence budget was not sufficient to meet increases in costs.

“The upward pressures have meant that in successive years, I and ministers, we had to think hard about what we would cut,” Sir Bill said.

The military budget had also been left with a “significant problem” which “persists to this day” after Mr Brown ordered cuts after a dispute over accountancy rules in 2004, he said.

The Ministry of Defence had to find £2-£3 billion of “efficiency savings” in the spending reviews in 2004 and 2007. As a result the military had “reduced a number of the main equipment programmes and in one or two notable cases chosen to acquire things later than we originally planned”, he added.

Former military commanders had accused Mr Brown of deliberately misleading the inquiry on Friday when he blamed the military for failing to equip the Armed Forces properly.

Sir Bill said that Mr Brown was correct in his evidence that the military budget had increased in real terms by a percentage point or two each year. However, spending had risen because of increased equipment costs, the high level of deployment in Afghanistan and Iraq and the weakness of sterling.

“The defence budget has been stretched and our estimated cost of the programme has exceeded our ability to pay for it,” he added. “That does not mean that defence is underfunded or has been cut, but that we have a very serious management issue which we have been trying to work through in the last few years.”

Sir Bill said that significant additional pressure was put on the Armed Forces when Britain sent troops to Helmand province in southern Afghanistan in 2006 while maintaining a large deployment in Iraq.

“There was some apprehension that if we ended up being involved in Iraq for longer than we were then assuming, then we would become very stretched indeed, as proved to be the case,” he said. “Being involved in both theatres undoubtedly constrained how much we could contribute to either of them.”

He also revealed that military commanders had been raising concerns about the safety of Snatch Land Rovers almost five years ago. He said he was aware that they were “very concerned about the protection of the vehicles”.

The Armed Forces started the wars in Iraq and Afghanistan with “an outdated stock of armoured vehicles” but the situation had improved, he added.

Sir Bill defended the delays in replacing Snatch Land Rovers after families of troops blown up by roadside bombs in Iraq and Afghanistan repeatedly argued that the vehicles were not fit for purpose.

Officials travelling with Mr Brown in Afghanistan at the weekend said that an announcement on 200 new armoured vehicles to replace Snatch Land Rovers was expected within weeks. The Conservatives pointed out that the original contract notice was for “up to 400” vehicles.

“The reason the Prime Minister’s announcement was confined to these 200 was because we are able to acquire these through an urgent operational requirement as a call on the reserve,” Sir Bill said. “It certainly does not mean that they won’t acquire more.”

Sir Bill added: “The fundamental problem is that for some purposes military commanders will always argue that a highly mobile, lightweight vehicle of that sort is important and indeed operationally critical in some cases.

“That is little comfort to those who lost loved ones in Snatch Land Rovers. It is ghastly. I feel that very strongly”.

Earlier David Miliband told the inquiry that Britain must not turn its back on the world as a result of the controversy over the Iraq war. The Foreign Secretary said that it was important not to learn the “wrong lesson” from the conflict and to decide to leave international engagement to other countries.

He admitted that the March 2003 invasion of Iraq exposed “divisions” in the international community but insisted the UN would have been damaged if the conflict had not gone ahead.

“We must not be a country that turns our back on the world because if we do, because of the hard decisions that we are faced with, we will be much poorer in all senses of that term,” he added.

Mr Miliband told the inquiry that he voted for the invasion of Iraq in the Commons because Saddam Hussein’s defiance of the United Nations posed a danger to global peace and security.

Sir John Chilcot, the inquiry chairman, adjourned the public sessions until after the general election.and issued a warning to politicians not to use the inquiry for party-political reasons.