"The government has no higher duty than the defence of the realm, and the nation has no greater obligation than to look after those who have served it," Defence Secretary Liam Fox told the House of Commons.

Prime Minister David Cameron promised the "armed forces covenant" while campaigning for last year's election amid concern over poor military housing, a lack of separate hospital wards for soldiers and low veterans' pensions.

Britain has 9,500 troops in Afghanistan and during the past decade was also heavily involved in Iraq.

The covenant will be contained in a new bill now going through parliament and is meant to inform future policy and the provision of public and commercial services.

"The Armed Forces Covenant does not need to be a long and detailed charter. It should be a simple and timeless statement of the moral obligation that we owe," Fox said.

In a sign of what this could include, Fox announced extra funding for schools with many service children to ensure they are helped when their parents deploy, and a reduction in council tax for serving soldiers.

Veterans will also get new cards giving them discounts and privileges, and those with genital injuries will be get three rounds of in vitro fertilisation (IVF) fertility treatment, he said.

The Royal British Legion, a veterans charity, said the announcement was a "historic breakthrough".

But the announcement coincided with news that the defence ministry was planning a further round of savings, only seven months after slashing the military's budget to help reduce a record deficit.

A three-month study, reporting in July, will consider how more personnel and equipment programmes could be cut.

Fox told lawmakers: "The obligation we owe to our service men and women, set against the commitment and sacrifice which they make, is enormous.

"In the current financial climate we are not able to do as much to honour that obligation, nor to do it as quickly, as we would like. But we can make clear the road on which are embarked."

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