European members of NATO need to pool their defense funds to bolster their declining military power, US Defense Secretary Robert Gates says.

The Libya air war has exposed serious shortcomings among NATO allies and European governments will have to agree on joint defense budget priorities to rectify the problem, Gates told AFP in an interview.

The Pentagon chief, who is due to retire this week after more than four years in the post, reiterated views he expressed in a blunt speech in Brussels earlier this month, in which he warned the alliance faced a potentially "dismal" future.

"The truth is, as I said in Brussels, there is a lot of military capability and a lot of money being spent in Europe," Gates said on Thursday.

"The problem is, is how it's being spent, and not a sufficient acknowledgement that every nation in NATO can't have a full spectrum capability militarily," he said.

European allies are spending more than $300 billion on defense, but often in an uncoordinated manner, he said.

"So at one point do countries begin to pool their resources, begin to pool their capabilities and say, together they can do this?" he said.

Gates added there are "several countries, and I'm not going to name any names, that can't afford F-16s (fighter jets), but they can pool their resources as they have on the C-17s, the cargo planes, then they have a real capability."

He said he was urging "greater integration within NATO."

In his Brussels speech on June 10, Gates said that many NATO members did not have the military resources to participate in the Libya air campaign and that failure to coordinate defense spending over the years had "short-changed" operations.

He also warned that failing to pool funds and coordinate training and other efforts "bodes ill for ensuring NATO has the key common alliance capabilities of the future."

Gates' critique of NATO prompted a sharp response from French President Nicolas Sarkozy last week, who said the American defense secretary's comments reflected the "bitterness" of a future retiree.

"Mr Gates was heading towards retirement and it gave him pleasure" to criticise the alliance, Sarkozy told a news conference Friday after a summit of European Union leaders in Brussels.

"You can't blame someone who's retiring for showing bitterness," he said, adding that was Gates said was "completely false."

The Pentagon chief's press secretary, Geoff Morrell, has declined to comment on Sarkozy's remarks.

In his Brussels address, Gates rebuked allies for what he called chronic underinvestment in defense, saying NATO members in the Libya campaign are running out of munitions and lacking surveillance aircraft and specialists to identify targets.

Senior British officers have warned that the Libya campaign is putting an increasing strain on the country's armed forces.