But French President Jacques Chirac, German Chancellor Gerhard Schroeder and their partners from Belgium and Luxembourg said they did not want to undermine the US-European alliance or NATO.

Nevertheless the proposals -- which went further than forecast by diplomats in the run-up to the morning summit -- have the potential to provoke disquiet in Washington and London.

In particular, talk of a new "European Security and Defence Union"could be viewed with suspicion in other EU capitals.

The ESDU would "gather those member states that are ready to go faster and further in strengthening their defence cooperation", the four leaders said in a joint statement after two hours of talks.

Such a development raises the prospect of a two-speed Europe as the EU struggles to forge a common foreign and security policy, which has been left in tatters by divisions over the war on Iraq.

The four leaders instructed their defence ministers to establish "not later than 2004" a European military command headquarters for joint operations outside the NATO arena.

In parallel they called for the "nucleus of a collective capability" offered by EU armed forces -- which could spell the beginnings of an EU army.

Much of the joint statement was directed at the convention now writing the EU's first-ever constitution, with the leaders calling on the forum to take their suggestions on board in drafting the text.

All four countries said other EU governments were welcome to join in their plans. Chirac, who has been at bitter odds with the United States and Britain over Iraq, also stressed the "fundamental character" of the transatlantic alliance.

"Our countries see their commitments in the European Union and in NATO as complementary commitments," the French president told a news conference.

"In building a stronger Europe we obviously contribute to a stronger Atlantic alliance."

But the suspicion remains that the four countries are going their own way, after earlier this year sparking the most serious rift in NATO history when they refused a US request to beef up Turkey's defences ahead of war on Iraq.

British Defence Secretary Geoff Hoon warned the four summit countries against encroaching on NATO's turf.

"I stress the importance of the consistency about the harmony of EU and NATO defence, which must be a result of a consensus between all of the members and the new members of the EU," Hoon said while on a visit to Hungary.

Along with France, Britain is one of the EU's few military heavyweights, and observers say its armed forces must be at the heart of any credible European defence strategy.

The plans will be presented to the 11 other EU nations at a meeting of foreign ministers this weekend on a Mediterranean cruise, and taken up again at an EU summit in June at Thessaloniki, Greece.

Spanish Foreign Minister Ana Palacio gave an indication of the likely reception by saying attempts to build a defence policy outside the full EU "had no right to be called European".

She told the Spanish parliament that the Brussels meeting, called "at a time of controversy, is also a divisive factor within the Union and could prove counterproductive".

But Schroeder said the EU's enlargement next year to 25 countries made it more pressing than ever to forge a common security policy.

"I underline that in NATO, we don't suffer from too much America, we suffer from not enough Europe," he also said.

NATO, while warning against "unnecessary duplication", gave a guarded welcome to the proposals, which included a commitment to upgrade military spending by countries that -- France apart -- spend relatively little on defence.

"NATO welcomes any action of NATO members to strengthen the European pillar of the transatlantic alliance," said an alliance spokesman, Yves Brodeur.

SPACE.WIRE