The heads of the Army, Navy and RAF have lost their seats on a central defence decision-making body, Liam Fox has told MPs.
In a Commons statement on 27 June 2011, Dr Fox explained that their views would instead be represented by the head of the armed forces.
He told MPs that the senior officers had spent too much time "trying to influence policy and haggle over funding" but would now be allowed "to spend more time with their service".
A new joint forces command would encourage co-operation between the branches of the military and provide a "natural home" for capabilities such as cyber warfare.
Outlining the findings of Lord Levene's review of defence management in a statement to MPs, Dr Fox said the report "describes a department bedevilled with weak decision making and poor accountability, where there is insufficient focus on affordability and proper financial management".
He said: "The Defence Reform Unit recommends a strengthened decision making framework for defence, centred on a new, leaner defence board based around the defence secretary who chairs and makes the decisions.
"He will be supported by the Permanent Secretary and the Chief of the Defence Staff, who will bring to the meeting the views of the single service chiefs.
"I have already established this new board and chaired the first meeting last week.
"This new group will offer the kind of decisive and focused strategic direction that has been so lacking in recent years."
Shadow defence secretary Jim Murphy said there had been a "fracture" in the relationship between ministers and the service chiefs.
He said: "Last week the prime minister told service chiefs 'I'll do the talking and you do the fighting'.
"For some, unfortunately, today's announcement of the removal of the three service chiefs from the defence board will be seen as a structural confirmation of that strident sentiment."
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