The Ministry of Defence and the Treasury are heading for a difficult negotiation about how to pay for military action in Afghanistan, expected to cost hundreds of millions of pounds.

Cost constraints will not be allowed to restrict the contribution Britain makes to a joint operation with the US, but the Treasury is signalling it has little, if any, money left in the contingency reserve.

It has already been forced to meet claims, amounting to hundreds of millions of pounds each, for the foot-and-mouth outbreak, rail safety after the Hatfield disaster, compensating former coal miners with respiratory diseases, and the continued military presence in the Balkans and Sierra Leone.

The MoD says it is too soon to estimate the cost of the planned operation, but will begin talks with the Treasury once its scale and potential duration become clearer.

By tradition, the Treasury picks up the net additional cost of substantial conflicts, while the defence ministry continues to meet salary costs of the troops involved.

After action in Kosovo in 1999 - which involved warships, aircraft, ground troops and the firing of several Tomahawk cruise missiles - the MoD received an extra £200m.

President George W. Bush has said the campaign against Osama bin Laden and terrorist networks is likely to be long and different from previous wars, making it difficult to estimate its cost.

An official is expected to point out that the MoD underspent its £23bn budget by £150m last year. It is worried that a heavy call on public funds would leave nothing for emergency claims by other ministers.

"Any additional claim on the reserve arising from the attacks on the US will have implications for how we deal with unforeseen requirements for additional resources in this financial year from other departments," the official said.

The Treasury set aside £2.2bn for contingencies during 2001-02 in this year's Budget, but calls have already been heavy. Although much of the £2.8bn cost of foot-and-mouth measures can be reclaimed from the European Commission, the Treasury still faces a bill approaching £1bn.

The issue is likely to have implications for the next three-year public spending round, due to be completed next year. Intelligence and security agencies have made clear they are looking for extra funds to fight terrorism, and the MoD could follow suit.

With the economy slowing and the outlook uncertain, Gordon Brown, chancellor, will already have a hard job meeting demands from health, education, transport and home office ministers for generous settlements to meet Labour's election pledge to transform public services.

Mr Brown must also find the money to fund his commitments to introduce new pension, employment and children's credits. But in the current climate, it will be difficult to continue overall public spending growth at its current 3.8 per cent a year.