The Sunday Telegraph's Defence and Security Correspondent writes that allowances paid to thousands of members of the armed forces are to be slashed by hundreds of millions of pounds.

More than £250 million will be stripped from the armed forces' £880m allowances budget in a series of purges ordered by the Treasury.

Perks for senior officers, such as payment for chefs, cleaners, drivers and gardeners, will also be slashed and military personnel of all ranks will be asked to make personal financial contributions to some allowances such as those which cover travelling from home to work.

Defence chiefs have accepted that the cuts are likely to cause a "bloodbath" within the military. Senior officers warn it could seriously damage troop morale.

A "Warning Order" has already been dispatched to members of the Army by Lt Gen Mark Manns, the Adjutant General, informing soldiers that their allowances are about to be slashed in the wake of the Comprehensive Spending Review.

The document, a copy of which has been read to The Sunday Telegraph, states: "As a result of pressure from the Comprehensive Spending Review and the Strategic Defence and Security Review, there is a requirement to identify savings from the MoD's allowances budget".

The order goes on to explain that an estimated £250m will need to be saved and that troops will be informed of the findings in the next few weeks. Similar warnings have been sent to members of the RAF and the Royal Navy.

A senior officer said the government plan to cut allowances was like entering a minefield. He said: "You shouldn't compare servicemen to MPs.

"We haven't been milking the system – allowances prevent service personnel from being financially penalised in the course of their duty. If we now have to pay to serve the country the government should expect the appropriate response."

However, one senior defence source said of the impending cuts: "There are many in the armed services who have been living off a hog's back – well, the good times are over".

The highly emotive issue of the Continuity of Education Allowance, which helps pay for the private school fees for many within the services will also be examined. CEA costs the taxpayer £180m a year and is claimed by 5,500 service families.

As well as allowances, it is understood that all forms of specialist pay – which makes up a significant proportion of the salaries of pilots and other aircrew, divers, bomb disposal experts, submariners and members of the special forces – is also to be examined with a view to being reduced.

Qualified aeroplane and helicopter pilots, as well as specialist aircrew, can earn up to an extra £40 a day on top of their salaries even if their job does not involve flying.

Under the generous allowances scheme pilots are still paid the full "flying pay" for three years once they have left a "flying job".

The rate of specialist pay reduces to 75 per cent in the fourth year, 50 per cent in the fifth, 25 per cent in the sixth and ceases in the seventh. It is the same principle for all other recipients of specialist pay in all services.

It is understood that the Chancellor, George Osborne was said to be "staggered" to learn that extra pay annually worth millions of pounds was paid to pilots who do not fly and submariners who no longer serve at sea.

Local Overseas Allowance, which is paid to troops serving abroad where the cost of living is more expensive than the UK, will also be reduced. In 2009/10 LOA cost the MoD £224m.

Defence sources have revealed the review will also bring to an end the payment of allowances which currently do not require receipts, such as the cost for meals and fuel during trips away from a serviceman's base. ...

• Full article by Sean Rayment, The Sunday Telegraph: Allowances for armed forces to be slashed