After Moscow's seizure of the Crimea peninsula in 2014, NATO's 30 members pledged to try to increase their spending to two percent of their Gross Domestic Product (GDP) by 2024.

On Tuesday, the alliance's annual report said only seven -- Greece, the United States, Lithuania, Poland, Britain, Estonia and Latvia -- hit that level in 2022.

That figure was down from eight alliance members in 2021 and 11 in 2020.

"Many Allies have announced significant defence spending increases since Russia's invasion," Stoltenberg told a press conference.

"Now these pledges must turn into real cash, contracts, and concrete equipment, because defence spending underpins everything we do."

He put the fall in the number of countries matching their pledge down to the fact that the economies in several allies had performed better than expected, making their defence budgets look proportionally lower.

The United States is by far the biggest military spender, representing approximately 70 percent of the alliance's more than $1 trillion defence spending in 2022.

Washington has pushed its European allies for years to stump up more money for their militaries, and across the alliance, spending has gone up.

Overall expenditure by European members and Canada rose by 2.2 percent in 2022, with the increase over the past eight years now totalling $350 billion.

"Since 2014, allies have increased defence spending and we are moving in the right direction. But we are not moving as fast as the dangerous world we live in demands," Stoltenberg said.

"So, while I welcome all the progress that has been made, it is obvious that we need to do more, and we need to do it faster."

Russia's all-out invasion of its neighbour a year ago has seen a string of European allies commit to spending billions more on their armed forces.

The alliance is now looking to set a new spending target at its July summit in Vilnius, with most allies agreeing that two percent should become a "floor, not a ceiling" for national spending.

But some nations struggling to hit that level are reluctant to make the target too ambitious or the commitment too concrete.

"In this new and more contested world, we cannot take our security for granted," Stoltenberg said.

"It is our security that underpins our prosperity and our way of life."

NATO diplomats say the wrangling over the new defence investment pledge -- which requires the consensus of all allies -- was expected to run right up to the summit in mid-July.