The Trump administration has warned Nato allies they must increase defence spending "immediately" or risk facing consequences, as leaders prepare to gather for a crucial alliance summit.

Senior US officials said several member states are still falling behind on a commitment to spend 5 per cent of GDP on defence by 2035, insisting President Donald Trump expects countries to accelerate their plans rather than wait until the deadline.

Matt Whitaker, the US ambassador to Nato, said on Sunday: "Some allies are doing more than others. Poland, the Nordic countries, the Baltic countries lead the way.

"But many others are lagging behind, and President Trump expects all allies to step up immediately, and not only get on a sustainable path to the 5 per cent but get to 5 per cent as soon as possible."

Sir Keir Starmer this week unveiled a £15 billion increase in defence spending, although the package is expected to take UK defence expenditure to 2.7 per cent of GDP by 2029, still well below the target backed by Washington.

The White House is understood to be considering rewarding countries that spend more on defence while penalising those that fail to do so.

Nations investing more heavily in their armed forces could receive priority access to US weapons purchases and enjoy greater opportunities for face-to-face meetings with President Trump.

Meanwhile, Defence Secretary Pete Hegseth has launched a six-month review into the size and readiness of American military forces stationed across Europe.

The assessment could result in US troops being withdrawn from countries that do not meet defence spending expectations, reports The Telegraph.

Senior administration officials repeated on Sunday that failing to reach the 5 per cent goal would ultimately leave Europe and Canada less capable of defending themselves.

They added that Mr Trump is expected to outline any specific consequences for countries that ignore the warning when Nato leaders meet in Ankara, Turkey, this week.

The stance risks creating fresh tension between Washington and London after Sir Keir indicated there was little scope for another major increase in defence spending.

The Prime Minister announced cuts to planned infrastructure projects to help fund the latest military spending boost, while suggesting that Andy Burnham, the new Labour MP for Makerfield who is expected to succeed him, would need to increase borrowing to cover around £5 billion of the package.

The Express previously reported that President Trump has doubts about Britain's ability to reverse years of underinvestment in defence.

The Nato summit is expected to mark Sir Keir's final opportunity to rebuild relations with President Trump before he steps down.

Britain has also deployed HMS Prince of Wales off the coast of Iceland as part of a Nato operation designed to deter Russian activity in the High North.

The Royal Navy's 65,000-tonne aircraft carrier is operating with F-35 fighter jets during Nato's Arctic Sentry mission, which is aimed at countering hostile activity in the region.

President Trump is also due to hold talks with Ukrainian President Volodymyr Zelensky during the summit, with discussions expected to focus on efforts to end the war in Ukraine.

The two leaders previously met on the sidelines of the G7 summit in Switzerland in June.

US officials said Ukraine has strengthened its position on the battlefield this year and is threatening Moscow with drone attacks. At the weekend, Ukrainian forces also targeted electricity substations in occupied Crimea, leaving much of the peninsula without power.

"The battlefield has clearly frozen over the last couple of months and neither side is making a lot of progress," one senior US official said.

"The president feels a real sense of urgency to try to bring this to a stop."

President Trump's meeting with Nato leaders comes months after he suggested continued US participation in the alliance was "beyond reconsideration", raising fresh questions over America's long-term commitment to the organisation.

However, alliance members expect this week's summit to reaffirm support for Article 5, Nato's collective defence clause, which states that an attack on one member is considered an attack on all.

Leaders are also expected to endorse a communiqué committing €70 billion (£60 billion) in military support for Ukraine in 2026, alongside at least equivalent levels of assistance in the following year.