The signatories to the letter include retired admirals, generals and air marshals, as well as wounded war heroes and leading academics.
They accuse the Ministry of Defence of "accounting deception" regarding meeting NATO's target of spending 2% of GDP on defence.
The letter also accuses the MoD of giving "disingenuous" answers about funding.
It claims that security is threatened "in almost every corner of the globe", such as "nuclear sabre-rattling over Crimea", extremism in the Middle East, China's assertiveness and the "unpredictability" of North Korea as a threat.
The uncertainty of NATO's future is also mentioned. It concludes:
"The Armed Forces are having to seek further very damaging savings in manpower, support and training at a time when the likelihood of combat operations is increasing."
"Fund the review properly, and if this means a commitment to increase expenditure over the lifetime of the parliament, do it."
Defence Secretary Sir Michael Fallon said "The choice is between the strong leadership of Theresa May or Jeremy Corbyn, who has called for the Army to be abolished."
Nia Griffith, Shadow Defence Secretary says the Conservative Party "has decided to fiddle with the figures, by including items in defence expenditure – such as pensions – that do not contribute to core defence capabilities."
She said that "Michael Fallon needs to start listening to former and current serving officers and give our forces the resources they need."
UKIP defence spokesman Bill Etheridge, meanwhile, said "The Conservatives, once the party we could count on to keep us safe, think nothing of giving our money away in the form of foreign aid, and now seem willing to compromise our safety to do so.
"The USA has called on Europe to increase investment in defence, yet he we are, supposedly the USA's closest ally, cutting ours.
"These figures are a disgrace and I am disgusted at this government's priorities."
from Defense Aerospace - Press releases http://ift.tt/2pCbv2t