The war in Afghanistan means that the regular Army is likely to be spared, in the short term, from the worst of the cuts.
David Cameron's National Security Council is meeting today to consider which parts of the £37billion annual defence budget can be shrunk as part of next month's Strategic Defence and Security Review. Some have estimated it might be reduced by as much as 20%.
The overall size of the Armed Forces is likely to diminish and the Army's armoured units, the RAF's new fighter jets, the Navy's two £6 billion aircraft carriers, and the Trident replacement timetable could all be affected.
The Territorial Army could also be drastically reduced in numbers, from the 35,000 soldiers it has at present to just 9,000 under the most drastic proposals.
A Ministry of Defence paper circulating in Whitehall sets out three options for TA numbers and even the most modest cut would reduce numbers to around 24,000.
A "central" option would leave the TA with about 14,000 soldiers, while the most radical would see numbers fall to 9,000.
The smaller TA will also be more closely integrated with the regular Army. Currently, TA units stand independent of the Army, with reservists deployed on an individual basis to full-time units on operations.
However, a paper for the thinktank Policy Exchange to be published on Thursday is expected to say the opposite.
The analysts are thought to be recommending that Britain should follow the US example by using more reservists in combat areas such as Afghanistan, partly because they are cheaper to train.
Running the TA costs nearly £500 million a year and each reservist soldier costs more than £15,000, significantly more than Royal Navy and RAF reservists.
Colonel Richard Williams, a former SAS commander and the joint author of the paper, told BBC Radio 4's Today programme: "There is a view of the Territorial Army which is very unfair relative to how its individuals have operated overseas in the combat zones of Iraq and Afghanistan.
"Dad's Army is a particularly fond image, but actually if you look at the models of the combat capabilities deployed it doesn't meet up with the potential we are proposing.
"If you are doing a complex intervention such as southern Iraq or Afghanistan, you get an awful lot from somebody who has been a bank clerk or has an alternative employment and is not a full-time soldier."
Liam Fox, the Defence Secretary, will present the council with options for cuts.
