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Defence Secretary Liam Fox says negotiations over his department's budget are "ongoing", with "difficult decisions" expected in September.

He said: "The crux decision is what are the risks we are willing to take for Britain's national security."

On Thursday the chancellor said the £20bn cost of renewing Trident would have to come from the defence budget.

Asked during a visit to Portsmouth if that had surprised him, Dr Fox said: "In politics nothing surprises me."

He added: "We have always said that we must maintain Britain's independent nuclear deterrent and the most cost-effective way is replacing the naval missile programme.

"We have a value for money review reporting to the Treasury but we will have a continuous deterrent."

Dr Fox said he could not confirm whether other major defence projects would go ahead because "we are still in the review, it is still ongoing, we do not know the size of the budget".

But he added: "A lot of the contracts that have been entered into will be as expensive to leave as to continue but we will want to make decisions about what is best for the defence in the long term.

"We will make most of the difficult decisions in September. I will then take the sum of that to the national security council and make my announcement in the last week of October."

In his Budget in June, Chancellor George Osborne said departments would face average cuts of 25% when the government's public spending review was completed in October.

The strategic defence review, the first since 1997, has been examining what sort of armed forces will be needed in future and the cost involved.