Scheffer said: "Never before has there been greater demand for the security Nato can provide.

US General James Jones, Nato's military commander, was busy trying to put the final touches to the NRF, a 25,000-strong fully equipped response contingent to be dispatched to the world's crisis flashpoints at short notice.

Besides enlargement, Nato will formalise closer ties with nations already working with the alliance such as Japan and  Australia.

Potential new members such as Albania, Croatia and Macedonia are  expected to be given encouraging signs that they might be invited to  join Nato at the next summit in 2008.

And following on from comments on Tuesday from George Bush, the US president, and Scheffer, the members were expected to say that the door remained open to former Soviet republics Ukraine and Georgia - much to the displeasure of Russia.

Longer-term goal

Leaders were also set to discuss Nato's longer-term goal of transforming the alliance into a force able to face up to the security challenges of the 21st century, such as terrorism and weapons of mass destruction.

On Tuesday evening the leaders had a working dinner to thrash out  solutions to the alliance's high-stakes mission in Afghanistan.

With a resurgent Taliban in the south and east of the country and a president barely able to set foot outside Kabul, losses have been high. The Nato force is hobbled by shortages of equipment and troops and restrictions on their activities.

Restrictions being lifted

It was understood that Dutch and Romanian delegations could lift all their restrictions, while the Czechs, the Danes, the Hungarians and the Greeks were also said to be prepared to relax some of their conditions.

Scheffer said on Wednesday: "Contributing to peace and stability in Afghanistan is a just cause vital to our collective stability and shared values.

"Making our forces more modern needs investment. Defence cannot be assured on the cheap."