MOSCOW (Reuters) - Russia's Security Council will advise President Vladimir Putin to cut land-based nuclear missiles and merge the rest of the Strategic Rocket Forces with the air force, a Defense Ministry source said on Thursday.

The source told Reuters the move was part of a restructuring of Russia's armed forces that would start in 2001 and result in three branches of the military -- land, sea and air -- rather than four, including the Strategic Rocket Forces.

Putin's advisory but influential Security Council meets on Friday to discuss military reforms including the nuclear missile cuts and merger.

The move, if Putin agrees with it, would represent a lop-sided compromise in an internal row and a major change in Russian strategic policy. It would lead to much greater emphasis on the hitherto neglected submarine-based deterrent.

``The Strategic Rocket Forces will be merged with the air force and silo-based missiles which become obsolete in 2003 will be scrapped,'' the source said.

Defense experts say Russia has about 750 intercontinental ballistic missiles, most of them in silos or on mobile launchers. A few dozen are railway-based. All but 20 were deployed more than a decade ago.

The overall number of warheads is about 3,500. A similar number are loaded in submarine missiles and air-launched cruise missiles or bombs.

The land-based warheads could be cut as low as 1,500, the source said. That would be in line with Russian proposals for START-3 arms treaty talks with the United States.

No Reshuffle Expected

The source said there would be no reshuffles in the upper echelons of the armed forces. There has been speculation Putin might use the meeting to sack Defense Minister Igor Sergeyev and the chief of General Staff, General Anatoly Kvashnin, who have both been at daggers drawn over the plans for nuclear forces.

There will also be structural changes in the Strategic Rocket Forces -- which are responsible only for land-based missiles -- and savings will be used to fund conventional ground forces which have been found wanting in the Chechnya war.

``We are not talking about liquidating the Strategic Rocket Forces or denting Russia's nuclear shield, including its land-based component,'' the first deputy chief of General Staff, Valery Manilov, told reporters.

Few would disagree the 1.2-million-strong armed forces are in poor shape -- low on cash, short of modern equipment and demoralized despite fighting phrases from their military-minded president and continued domestic support for the Chechnya war.

The differences arise when deciding how to improve things.

Compromise Found

Kvashnin has made clear he favored deep cuts in the Strategic Rocket Forces and a merger with or even absorption into the air force. He wants more money for ground forces.

Sergeyev, a former missile commander, sees the rocket forces as a vital deterrent umbrella and a guarantee that Russia retains a seat at the top table of international powers.

He does not rule out some cuts but favors putting all legs of the formidable if aging triad of nuclear weapons based on land, in submarines and aboard planes under one separate command -- but not under the air force.

So the changes outlined by the source have a distinct whiff of compromise, although Sergeyev has come off worse.

Further changes to the Security Council plans outlined by the source cannot be excluded altogether.

``The range of views is impressive -- from threatening words about everyone being sacked to more neutral talk about a compromise with everyone getting less,'' wrote the newspaper Vremya Novostei, referring to speculation about the plans.

With only so much money around, something has to give.

To get a feel for the problem, consider the defense budget.

On Wednesday, President Clinton signed a $287.5 billion defense spending bill for the fiscal year starting October 1 -- that is some $30 billion bigger than Russia's entire gross domestic product. The Russian defense budget is $4.5 billion on paper but far less in practice.

Putin is expected to agree to honor an earlier pledge to dedicate 3.5 percent of GDP to defense spending.

Russia has been struggling to reform its armed forces since the mid-1990s but economic and political crises as well as two wars in Chechnya have made the process at best intermittent.

(Additional reporting by Robert Eksuzyan)