Gates' comments drew rebuttals from Prime Minister David Cameron and British defense officials, the BBC reported Thursday.
Speaking on BBC radio, Gates said the "fairly substantial" cuts in defense spending would reduce the United Kingdom's military's "full spectrum capabilities and the ability to be a full partner as they have been in the past."
"Spectrum" refers to a country's ability to fight on land, sea and air.
Britain plans to trim 30,000 people from its armed forces by 2020, leaving a force of 147,000.
Cameron disagreed with Gates' evaluation, saying the U.K. had the fourth largest defense budget in the world.
"We are investing in future capabilities," he said. "We are a first-class player in terms of defense and as long as I am prime minister that is the way it will stay."
The Ministry of Defense said Britain had "the best trained and best equipped armed forces outside the U.S.," but that like Washington it had been forced to make "tough decisions" about defense spending.
Britain plans $261.5 billion in defense spending over the next 10 years, the ministry said in a statement. Construction of a new aircraft carrier was almost complete, the ministry added, while new state-of-the-art ships are also planned, including seven new submarines.
Gen. Nicholas Houghton, chief of the defense staff, warned last month the planned defense cuts could leave Britain with the "specter" of a drastically reduced force.