Boris Johnson stated that the UK would increase its defense spending to 2.5% GDP by the end the decade.
The prime minister stated that the "cost" of freedom is always worth it as members of NATO discussed how to respond to Russian aggression.
The PM stated that it could result in an additional PS55bn for 2030 and investments in future air combat capabilities to combat "more dangerous" environments.
According to reports, the defense secretary demanded a quicker time frame.
Tuesday's speech by Ben Wallace stated that defense investment must grow "before it is too late."
He later denied reports that he had asked for spending to exceed 2.5% GDP in 2028 - an indicator of the size and strength of the country's economy – in a letter to Prime Minister.
Sources close to Mr Wallace claimed that he was very grateful for the budget increase. He also said that he had always been clear that defense spending should be increased as threats change.
As the Madrid summit of NATO came to an end, Johnson stated that the country must "invest for long-term" in vital capabilities such as air combat, and adapt to "a more risky and more competitive world".
Tobias Ellwood is chairman of the Commons defense select committee. He said that ministers should listen and pay attention to the warnings by British Army chief Gen Sir Patrick Sanders, that the world is in an "1937 moment". This refers to Europe's failures to face the growing Nazi threat prior to World War Two.
Ellwood stated that "this timid increase over eight year shows we still don’t appreciate the changing geopolitical landscape, and the scales of threats coming over our horizon."
"The funds are urgently needed to reverse the cuts to troop numbers and tanks, ships, and fast jets - not within eight years."
After a noisy and public debate about defence spending over the past few days, the prime minister delivered a striking statement at his Madrid news conference.
"The logical conclusion of these investments, which we propose to make, is 2.5% GDP on defense by the end of this decade,"
This is far more than the 2% required by Nato for its members.
Based on the current projections of the future growth of the economy over the next eight year, I believe the goal could amount to an additional PS55bn for defense.
Others acknowledge that it is impossible to know the exact number, or the final costs of projects or major decision points between now & then. These are called spending reviews.
The prime minister hopes it will help to quell some of the grumbling public from those who claim his promises and words don't match.
The UK spent PS42.4bn last year on defense, an increase of PS2.5bn over the previous year.
The UK now counts its support for Ukraine in its defense spending. This brings the total current to 2.3% GDP.
Gross domestic product (or GDP) is a measure of the size of an economy. It is calculated by adding the total value all goods and services produced. It was PS2.1 trillion in the last year.
Johnson addressed questions regarding spiralling inflation caused by the war in Ukraine and said that "the price of freedom is actually always worth paying".
He stated that Russia President Vladimir Putin could continue to act against neighboring countries if Russia is not stopped. This would cause "further oil crises, panics, and economic distress for the entire world".