The Prime Minister has ordered an investigation into the numbers of people leaving the armed forces.
According to quarterly service personnel statistics released, more than 8,000 people chose to finish their military careers in the last year.
The services are at more than 6% below strength, with fewer recruits joining the military.
Theresa May has commissioned Defence Select Committee member Mark Francois to look into the issue.
He said it's important to try and get more people to join the Armed Forces.
"But if more people are leaving at the other end than are joining, and at the moment about 2,000 a year more are leaving than joining, then clearly we're thinning out."
Mr Francois added:
"Having looked at what we need to do improve recruitment, the Prime Minister has now asked me to look at how we improve retention."
The most recent Armed Forces Continuous Attitude Survey (AFCAS) suggested there had been a significant fall in morale across the services.
An MOD spokesperson said: "Recruiting and retaining talent is one of our top priorities and we have a range of schemes, including retention pay for specialist trades and flexible working to make sure we attract and keep the skilled personnel we need.
"The military has enough personnel to meet all its operational requirements, including being active on 25 operations in 30 countries throughout the world.
"In the past year we have recruited over 13,000 people into the Armed Forces."
Mark Francois and Gavin Williamson discuss recruitment during a committee hearing last month.
The British Army has admitted "bad mistakes" in recruitment policy, with the Defence Secretary going as far to say during a committee hearing last month that Capita could be stripped of its contract to recruit Army personnel unless there is an improvement.
Gavin Williamson was accused of responding "like a rabbit in the headlights" over the issue, after Capita failed to meet targets in any year since a 10-year £495 million contract was signed in 2012.
Conservative MP Mark Francois was critical of the Army's recruitment performance during the committee hearing, but the Royal Navy and RAF were able to meet their recruitment needs.
In 2018, the NAO said the Army was failing to meet its target for recruitment.