In the first defense review since 1998, Cameron said despite the planned cuts Britain would remain "an absolutely front rank military power," the BBC reported.
Among the equipment headed for the scrap heap is the Royal Navy's flagship aircraft carrier Ark Royal.
Britain's Harrier jump jets are also being axed with the savings going towards the cost of two new aircraft carriers.
The move means Britain won't have the ability to launch fighter jets at sea until at least 2019, the BBC says.
Staff cuts are also planned with the Royal Navy expected to lose some 4,000 personnel and the Ministry of Defense facing a substantial drop in its civilian staff.
The defense review said the Army will have to cut up to 7,000 of its personnel over the next five years and lose 100 tanks and heavy artillery.