Ms Dodds suggested that taxes will need to rise as the new military demands cannot be met be ‘tactical’ reductions to spending

In a letter replying this afternoon, the PM thanked Ms Dodds for her ‘hard work, deep commitment and friendship’

But in a Commons statement before he headed to the US, Sir Keir revealed that defence spending will be hiked to 2.5 per cent of GDP by 2027 – adding an extra £6billion a year in real terms.

He said that would be funded by reducing the aid budget from 0.5 per cent of gross national income to 0.3 per cent. It had already been lowered from 0.7 per cent by the Tories, with no timetable for returning.

Ms Dodds warned that the move would affect the UK’s support for Gaza, Sudan and Ukraine and could lead to the UK being shut out of multilateral bodies.

The announcement was seen as a pitch to Mr Trump ahead of Sir Keir’s crucial visit to the White House. Ms Dodds said she waited to confirm her departure until after the trip was complete.

The US president has been urging Nato states to spend 5 per cent of GDP on defence as he insists Washington will no longer underwrite protection for Ukraine or Europe.

Mr Trump praised the spending bump as a ‘great thing to do’ at a joint press conference last night.

Deputy PM Angela Rayner said she was ‘sorry’ to hear Ms Dodds had quit but increasing defence budgets was ‘absolutely right’.

Chancellor Rachel Reeves said: ‘Anneliese is a friend and has been a good colleague and it is disappointing to lose a colleague.

‘The decision to spend 2.5% of GDP on defence is the right decision. The world has changed, we can see that all around us in Europe and beyond.

‘We have to uplift what we spend on defence and we have funded that by reducing the international aid budget.

‘That is the right decision in the circumstances we face today as a nation and that is why Keir Starmer made that announcement on Tuesday.’

Tory leader Kemi Badenoch said she would support the PM’s choice, even if he could not persuade his own ministers.

Ms Dodds – a former shadow chancellor and party chair who attended Cabinet in her most recent role – was previously seen as a close ally of Sir Keir.

However, she wrote in her letter to the premier that taxes should rise instead of deep cuts to aid.

‘Undoubtedly the postwar global order has come crashing down. I believe that we must increase spending on defence as a result; and know that there are no easy paths to doing so,’ she said.

‘I stood ready to work with you to deliver that increased spending, knowing some might well have had to come from overseas development assistance [ODA].

‘I also expected we would collectively discuss our fiscal rules and approach to taxation, as other nations are doing.

‘Even 3 per cent may only be the start, and it will be impossible to raise the substantial resources needed just through tactical cuts to public spending.

‘These are unprecedented times, when strategic decisions for the sake of our country’s security cannot be ducked.

‘Instead, the tactical decision was taken for ODA to absorb the entire burden.’

Ms Dodds said Sir Keir was clear he wanted to ‘continue support for Gaza, Sudan and Ukraine; for vaccination; for climate; and for rules-based systems’.

‘Yet it will be impossible to maintain these priorities given the depth of the cut; the effect will be far greater than presented, even if assumptions made about reducing asylum costs hold true,’ she added.

‘The cut will also likely lead to a UK pull-out from numerous African, Caribbean and Western Balkan nations — at a time when Russia has been aggressively increasing its global presence.

‘It will likely lead to withdrawal from regional banks and a reduced commitment to the World Bank; the UK being shut out of numerous multilateral bodies; and a reduced voice for the UK in the G7, G20 and in climate negotiations.

‘All this while China is seeking to rewrite global rules, and when the climate crisis is the biggest security threat of them all.’

In his response, Sir Keir said the UK will ‘still be providing significant humanitarian and development support’.

‘We will continue to protect vital programmes – including in the world’s worst conflict zones of Ukraine, Gaza and Sudan,’ he said.

‘The decision I have taken on the impact on ODA was a difficult and painful decision and not one I take lightly.

‘We will do everything we can to return to a world where that is not the case and to rebuild a capability on development.

‘However, protecting our national security must always be the first duty of any government and I will always act in the best interests of the British people.’

Attending a convention in the north of England today, Ms Rayner said: ‘It is a really difficult decision that was made but it was absolutely right that the Prime Minister and the Cabinet endorse the Prime Minister’s actions to spend more money on defence.

‘We want to see the economy grow so we can then get back to having more money to spend on things like overseas aid and on our public services.’

Mr Trump said at the joint press conference with Sir Keir last night: ‘I’ve just read an article – a great article – about the work that you are doing in the UK as to the military.

‘You are raising it quite a bit, which is a great thing to do for your country – it’s a great thing to do.

‘It’s sad that we need that, but probably need that, so congratulations on that, I know you got it through.’

Defence Secretary John Healey suffered a bruising encounter with Labour MPs earlier this week as he attempted to defend the Government’s foreign aid cuts.

In a private meeting in Parliament, Mr Healey came under fire from a group of a dozen Labour MPs – mostly with backgrounds in development.

Mr Healey sought to reassure them that the Government would not halt spending programmes ‘abruptly’.

There were claims of Cabinet unrest at being presented with a fait accompli by Sir Keir during weekly meeting on Tuesday.

Alongside Ms Dodds, Net Zero Secretary Ed Miliband was said to have raised concerns.

Deputy PM Angela Rayner said the cut was ‘devastating’, but played down splits saying the government was united on the need to bolster national security and have a ‘balanced budget.’

The Prime Minister, who is visiting US President Donald Trump in the White House later today, has pledged an increase in military spending to combat Russia’s threat.

Ms Badenoch said she would support Sir Keir on cutting aid to boost defence.

‘I disagree with the PM on many things BUT on reducing the foreign aid budget to fund UK defence?’ she said.

‘He’s absolutely right. He may not be able to convince the ministers in his own cabinet, but on this subject, I will back him.

‘National interest always comes first.’

The announcement on aid and defence spending was seen as a pitch to Donald Trump ahead of Sir Keir’s crucial visit to the White House yesterday (pictured)

Minister’s resignation letter in full