The US is to axe thousands of troops as part of a far-reaching defense review aimed at coping with huge budget cuts over the next decade, officials say.

The changes to be unveiled on Thursday, January 5, are likely to end a decades-old policy of maintaining the strength to fight two wars at once.

President Barack Obama will announce the plans with Defense Secretary Leon Panetta at the Pentagon on Thursday, January 5.

The Pentagon faces more than $450bn in cuts in the next 10 years.

Another $500bn in cuts could be looming at the beginning of 2013, after a congressional committee failed to act on finding budget savings last year.

Despite this Mr. Obama, wary of the upcoming presidential election, is expected to emphasize that the US military budget is continuing to grow, albeit at a slower pace.

US officials have sought to portray the president as taking a deliberate approach to defense spending, insisting any troop reductions will be informed by a review of strategy by commanders.

White House spokesman Jay Carney described the planned cuts as "surgical". The president is also reported to have been closely involved in the decision-making process, BBC reported.