State of emergency: On base with the British-led units about to take over as Nato's global Response Force

Next January, British troops take over the leadership of Nato’s Response Force, a quick-strike unit of soldiers from 15 countries, ready to tackle everything from disaster response to an enemy invasion.Terri Judd joins them as they make their final preparations…

Precisely an hour before midnight, the Pathfinder Platoon parachutes in to the airfield. They are here to join up with special forces soldiers, who were sent ahead to observe the terrorists who have infiltrated this island off Estonia. Their task: to recce landing sites for the troops who will soon follow.

Over the water, Estonia's president has declared a state of emergency. The terrorists, who have taken over the island of Hiiumaa, forcing its frightened inhabitants to flee in boats, are also wreaking havoc with roadside bombs on the mainland. In the country's capital Tallinn, the police's rubber bullets and tear gas fail to quell daily uprisings by an increasingly hysterical population.

Most ominously, to the north, across the Gulf of Finland, enemy troops are massing on the border, a dark shadow looming over the Estonian Defence Forces on the other side. The country is on the brink of war.

For days, Nato's Response Force, backed by troops from Britain's 16 Air Assault Brigade, has been waiting for the political stamp of approval to strike out; now they have it and the Pathfinders are the tip of the spear.

At dawn, an F-18 fighter jet begins circling the island, jamming enemy communications. On the horizon, the naval task force stands ready in the Gulf, while F-15 and F-18 jets, Apache and Cobra attack helicopters, and Reaper drones are all on alert.

Lieutenant General James Bucknall gives the order to go, reminding his commanders that it is not simply a matter of recapturing the island but of sending a powerful message to the enemy massing across the water: "We are at a pivotal moment in the operation. We are about to land the first punch. We want to make sure that they feel the impact.

"It has to be decisive and we will do anything we can to delay a simultaneous, parallel counterpunch. We are setting the conditions to ensure there is no action and response from the opposition. Now is the time to say, we can see your preparation: don't even think about coming across."

At 08.29 exactly, C-17 and C-130 transport planes take off, carrying soldiers from the 2nd Battalion, the Parachute Regiment, on to the east of the island. At the same moment, Chinook helicopters lift troops from the 5th Battalion, the Royal Regiment of Scotland, and a French battalion on to the west and south. Immediately, they come under fire.

In the Combined Joint Operations Centre, where three-dozen screens glow with maps and tactical information – "Mission Secret" emblazoned in red across the top – the battle unfolds on the chat screen in a ticker-tape of sterile military terms: "3 BEFOR CAT A". Three soldiers from 5 Scots are seriously injured, two from 2 Para have minor wounds and the French have three casualties from an explosion.

Within seven hours, nine terrorists have been killed and eight captured, conventional and chemical weapons have been seized, and the objective is secure. The island is back in friendly hands, and the Estonian police can finally begin to restore law and order.

Of course, the entire scenario outlined above is fictitious – but the senior ranks sitting around the table next to Lt Gen Bucknall are very real, and the earnestness with which they approach the exercise is palpable.

Under canvas being pounded by torrential rain a couple of miles from the surfing mecca of Newquay in Cornwall sits a constellation of high-ranking army officers: one four-star general in the guise of Deputy Supreme Allied Commander Europe Sir Richard Shirreff, three three-star lieutenant generals, two two-star major generals and eight one-star brigadiers. It is a reflection of the deadly seriousness of the exercise that so many senior military figures are present.

Part of the reason why they are here is because, as of January 2013, the British-led Allied Rapid Reaction Corps (ARRC) will take over as Nato's Response Force, an agile, swift-strike unit with an advance party on 48 hours' notice to deploy. Over the following year, they could be tasked to deal with anything from disaster response to peace-keeping, or (as in today's exercise) making an initial entry ahead of a larger task force. The ARRC will be in command of all land combat troops and have the ability to call on a force of up to 25,000.

Nobody is willing to speculate publicly as to where they could end up – but undoubtedly everyone in the ARRC is watching the news with keen interest. "We in the alliance [Nato] need to be ready to meet the unexpected," explains General Shirreff bluntly. "We live in an uncertain and dangerous world."

Earlier this month, the headquarters was put through its paces, in the gruelling week-long exercise outlined above, before being granted the green light by Nato. Invisible to nearby residents along the north Cornish coast, 1,000 servicemen and women gathered behind the gates of RAF St Mawgan – a base more commonly used for Survive, Evade, Resist and Extract training, preparing personnel to deal with isolation, captivity and recovery.

In the weeks leading up to the exercise, the ARRC's Support Battalion drove in 100 15-tonne trucks to build a temporary town under canvas. They laid 6.2km of barbed wire, put up 140 giant tents, filled 5,000 bags with 100 tonnes of sand, and installed 35 generators and 17 miles of electrical cables. Meanwhile, 6.5 tonnes of potatoes, 21,600 eggs, 20,000 sausages and 600 jars of coffee were transported in to the cavernous cook houses.

An army may march on its stomach, as Napoleon famously noted, but it is paralysed without communications. For this exercise, soldiers from the Royal Corps of Signals were tasked with building an "office environment in the field" – one that would be the envy of many large corporations. In five weeks, they installed a Mission Secret network, laid six miles of copper and fibre cables, and installed almost 500 computer terminals as well as phone networks and back-up satellite systems.

"The combined power provision for the exercise would be enough to power 4,500 homes and other amenities, the equivalent of a town such as Port Stanley," says Lieutenant Phil Taylor, referring to the Falkland Islands capital, even though he had not been born when it was liberated by British troops in 1982. "This is my first job working on the biggest deployable headquarters in the UK," he says with a grin. "Everything after this will be a breeze."

Exercise Noble Ledger, as it is codenamed, has been more than a year in the making. It is the first manifestation of a new Joint Warfare Centre scenario – known as Skolkan – based around Baltic nations, in a deliberate effort to draw the military away from the all-too-familiar Afghanistan mindset.

Estonia approved the use of its topography and national statistics for the country under fire, while Finland "very kindly agreed" to have its map divided into the neutral nation of Otso and an aggressive enemy named Bothnia, something of a tongue-twister for many of the officers who served in the Balkans.

Exercise Noble Ledger is not a matter of bombs and bullets, of sending troops into freezing-field scenarios. It is a cerebral work-out, an examination of the cause-and-effect of every order issued in a multiple-strand reflection of modern warfare.

In this week's scenario, the conventional menace from Bothnia is compounded by a terrorist threat internally. While the infantry is focused on recapturing the island, police consultants are contemplating the rise in criminality, humanitarian advisers are holding meetings with the International Committee of the Red Cross to consider the possible displacement of citizens fleeing an invasion, and policy experts are wading through the resulting national and international political minefield. Analysts, meanwhile, are examining polling data, social media and national surveys to judge the social, cultural, economic and environmental impact of every military move. In the 21st century, operational success no longer simply means crushing an enemy.

In a warehouse-sized room, filled with screens, the complexity of Noble Ledger becomes evident at exercise control. At each terminal, an officer or civilian adviser is pulling another string of the giant puppet. "This is where the magic happens," says Lieutenant Colonel Stephen Segrave. "Any minute now, we are about to hit Narva power plant," he reveals, explaining that the exercise, currently focused on saving the island of Hiiumaa, is about to be dealt another problem on the other side of the country: a three-pronged terrorist attack on its main power plant, including a suicide truck carrying chlorine gas.

"They are about to have three simultaneous problems going on at the same time, as well as the threat to the north," Lt Col Segrave adds. "It is almost like being a film director, writing, directing and producing a film for an audience that is watching it at the same time as you are producing it."

As well as experts in every aspect of warfare – from the airborne task force to bomb disposal, intelligence to artillery, medics to chemical, biological, radiological and nuclear scientists – the room is filled with a host of civilian advisers. "We are replicating 15,500 troops but also k local government in Estonia and Latvia," says Lt Col Segrave. "We have former diplomats playing government ministers, others representing heads of police, UN officials and all the things the military needs to understand and integrate with. We have people playing what we used to call 'the enemy' and now call 'the problem' – but also criminal drug gangs and the terrorist element."

While the ARRC is 60 per cent British, it also has 15 partner nations – as is evident from the kaleidoscope of uniforms, from Portuguese to Polish, German to Greek. Most crucially to this exercise, a host of Estonian officers, who have worked alongside the British in Afghanistan, is on hand to offer advice as to what their own defence forces would do.

A former chief superintendent of Avon and Somerset and an ex-superintendent from Hampshire are working on portraying criminal gangs with links to the terrorists and examining local legislation. Two desks down, Nick Carter, a former deputy ambassador to Latvia, is representing the President of Estonia for a host of simulated media who have been brought in to give the exercise a taste of press scrutiny. "I have been on television twice as president and that was the bit I enjoyed most," he says, adding with a smile that when one of their team had to leave suddenly, they simply altered the scenario to have the British ambassador sent home in disgrace "to seek new instructions".

Down the road in Latvia – or Okehampton, Devon, to be more precise – the Joint Logistics Support Group is preparing to be the first "in", greeting the troops as they move into theatre with an infrastructure that includes everything from accommodation, medical provision, fuel, water and food. Its task will be to keep supply chains open to wherever the soldiers are based, an often- overlooked and dangerous but vital task.

While this is an international affair, the leading British component is evident everywhere, from the understated choice of flower-based route names to the objectives titled after beers. Asked why the terrorists oddly travel around in Minis, one officer explains wryly that their criminal funding came from a bank robbery – the Estonian Job.

For the troops of 16 Air Assault Brigade, who have completed repeated tours of Helmand, the enormous and almost mind-bogglingly complex Exercise Noble Ledger makes for a refreshing change, preparing them for a whole new kind of military scenario. "You can't just focus on Afghanistan," argues 5 Scots Captain Jonny Kerr succinctly, before adding, "You could go anywhere…"

On 12 October, the British-led Allied Rapid Reaction Corps was qualified for duty by Nato as a technologically advanced, flexible, modern force able to operate as a stand-alone unit or an initial entry command.

"It is absolutely the best in my point of view," says Lt Gen Bucknall. "Every opportunity we get like this we are continually pushing the boundaries, experimenting with new ideas. We have pots of experience in Iraq and Afghanistan but this scenario is different and it has got everyone to stop and think how we are going to operate in a different environment."

Nato's new Response Force, according to its assessors, is honed and agile, ready to move swiftly to intervene internationally. The reality undoubtedly will be far more cumbersome when debate starts between the alliance of 28 member states. As in Britain, many of the ARRC's 15 partner nations are experiencing defence budget cuts and an electorate weary of a bloody conflict in Afghanistan.

Privately, some officers concede that Nato's ambitious plans are not always backed up by assets, that "more and more is expected with less and less". "Everyone is in the same boat," says one officer. "Europe is broke and defence budgets are under scrutiny."

The added, unavoidable complexity of the Response Force is that their next mission, as ever, remains unknown – even whether it will be viewed as humanitarian or something more controversial. Until that mission is agreed, it will not be clear, in the words of one officer, which nations are willing to "put their flags on the table".

But for now, any such political debate remains on the back-burner as the new force focuses on a busy schedule of fictitious training until the day that 48 hours' notice becomes reality.