By Jonathan Marcus BBC defence correspondent

Israeli army considers urban combat training a key issue

The army is expected to take the lion's share of the cuts, which some analysts predict could involve up to 20% of its manpower.

Experts from Israel's prestigious Jaffee Center for Strategic Studies have told the BBC that, with Iraq's armed forces largely destroyed, what Israeli generals term "the eastern threat" no longer exists.

Iraq has always been a powerful factor in Israeli military decision-making.

Iraqi forces demonstrated significant strategic mobility in their war with Iran and an Iraqi armoured division participated in the 1973 Arab-Israel war.

Iraq's potential weapons of mass destruction (WMD) also figured prominently in Israeli threat assessments.

'Military revolution'

But at a stroke, all this has changed.

Israel wants to enhance the role of its hi-tech weapons

And for once budgetary pressures and strategic imperatives seem to be pressing in the same direction.

Israel's armed forces are very close to the United States in terms of both doctrine and training.

Go to any US exercise and - along with officers from many other countries - there is always a significant Israeli presence.

Israel has been one of the pioneers in combining new information gathering systems with advanced firepower - what some have dubbed "the revolution in military affairs".

The Israeli air force used this combination of capabilities to destroy Syria's air defences during the 1982 Lebanon war.

Israel is one of the foremost users of small pilotless planes or drones (properly called unmanned aerial vehicles or UAV's) for intelligence gathering and targeting.

Its pre-eminence rests upon a highly developed domestic computer software and electronics industry.

'Safety margin'

The Pentagon showed what this combination of information gathering and accurate firepower can do against Iraq.

Israel was hit by Iraqi Scud missiles during the first Gulf War in 1991

As one Israeli general I spoke to noted, if Iraq's armed forces were defeated by the equivalent of only four US divisions - a force much smaller than the Israeli army - then Syria, which has armed forces organised in very similar ways to those of Iraq, can have little optimism about its own military capabilities.

Thus, according to Israeli experts, their government now has a safety margin to introduce wide-ranging restructuring of its armed forces, especially the army.

Heavy armoured units may well be cut back in favour of lighter more agile formations.

Older tanks will be stored or converted for other uses, thus streamlining logistics and support.

More highly-specialised and trained infantry units may be needed.

Iran and Syria worries

But, as with all defence reform, the problem will be to ensure that new technologies are properly funded and that the lessons of the Iraq war are properly applied.

Drills are regularly staged in Israel

Defence reform will mean that Israel relies less upon reserve formations, especially in peace time.

As Israel's population has grown, the day-to-day need for reservists has diminished anyway.

Much of the patrolling of borders and the occupied territories will be done in future by regular units.

But the army cuts cannot go too far.

Large numbers of infantry battalions will still be needed for security duties.