Calls for a multibillion-pound cut in the UK’s overseas aid budget and closure of the Department for International Development (DfID) as a separate Whitehall entity are set out in a new vision for a post-Brexit “global Britain” backed by the former foreign secretary Boris Johnson.

Current definitions of aid spending would be broadened to include peacekeeping, and the BBC’s World Service would be expanded, as part of an effort to restore Britain’s ability to project soft and hard power.

The paper argues the UK should be freed to define its aid spending unconstrained by criteria set by external organisations, and its purpose expanded from poverty reduction to include “the nation’s overall strategic goals”. UK aid spending, set by law at 0.7% of gross national income, was £13.4bn in 2016.

The proposals are being fed into a Foreign Office review on UK soft power post-Brexit headed by the foreign secretary, Jeremy Hunt. There have been repeated reports suggesting the international development secretary, Penny Mordaunt, wants to dilute or abandon the 0.7% target.

The plans have been drawn up by Bob Seely, a Tory member of the foreign affairs select committee, and James Rogers, a strategist at the Henry Jackson Society thinktank. The report is designed to give substance to the slogan “global Britain”, and is probably the most serious effort by a Conservative MP to define the future challenges facing Britain’s overseas engagement. Johnson, who wrote a foreword to the report, says the proposals are “hard to disagree with”.

On Monday, Johnson argued that the aid budget could be spent to promote the UK’s interests abroad. “We could make sure that 0.7 % is spent more in line with Britain’s political commercial and diplomatic interests,” he told BBC’s Radio 4’s Today programme.

He said many countries around the world were challenging the current internationally set definitions of aid, pointing to the way Japan was using its development budget to promote the cause of Japanese railways. “We can be smarter in the use of our aid money,” he said.

He said: “People are looking at us and thinking, ‘Wow they have made this extraordinary choice to go global, to choose a different future, and what does it all mean?’ People are very very positive about this country. British diplomacy is expanding again.”

Dan Carden, the shadow international development secretary, condemned the report, saying it proposed that the UK “turns its back on its commitment to eradicate global poverty, calls for the Department for International Development to be broken up, the aid budget to be slashed and for the UK to pull out of the OECD’s forum of major international donors that oversees global aid spending.”

The report, Global Britain: A Blueprint for the 21st Century, suggests the Foreign Office should once again become the dominant outward-facing player in Whitehall, incorporating both DfID and the trade department. The Foreign Office would become the “undisputed intellectual driver of global engagement”.

The ineffectiveness of UK power projection has been compounded by disjointed Whitehall structures and imbalances in the nation’s spending on aid focused on economic deprivation, the report says.

It suggests all UK peacekeeping should be funded through overseas aid, with savings returned to the Ministry of Defence to increase the UK’s military power. An enhanced BBC World Service with a £1bn budget should be funded entirely from aid, the report says.

The authors calculate that Whitehall spent as much as £1.5bn on overseas aid in 2017-18 that did not meet current overseas development assistance definitions, and was therefore not counted towards the 0.7% ODA target.

The report proposes that DfID should be blocked from spending cash simply to meet the 0.7% target, and that if suitable projects cannot be located at year end, the cash should be held back. Aid spending on countries with substantial military or space programmes should be ended.

It argues: “The greatest alleviator of poverty in the world has been western capitalism backed by western foreign direct investment.”

DfID insisted on Sunday the government remained fully committed to the existing statutory target on aid spending. Yet Conservative political sources have recently questioned whether the definition could be changed.

The authors of the report claim Britain’s defence capability has shrunk so far as to threaten the UK transatlantic relationship, which they call the most powerful alliance in modern history. “It is staggering that the UK should be so wilfully blind to this danger,” the authors say.

The report suggests Britain’s three overarching foreign policy themes should be freedom for trade, freedom from oppression and freedom of thought and expression. DfID’s goals should be aligned to meet these three objectives.

Claiming that the battle for the 21st century is between open and closed societies, the report also suggests:

The introduction of a foreign agents act, listing the public relations agencies, reputation management firms, lobbyists, and others who work as agents for foreign states or who lobby on their behalf. Both the US and Australia have introduced similar acts: the US in the 1930s and Australia in 2017.

A counter-propaganda bill to introduce laws to ensure a health warning on broadcasters and other media that are paid-for propagandists, especially those funded by authoritarian states and which do not have an independent editorial line.

Giving Ofcom greater powers. RT and Sputnik should not be banned, but fines could be strengthened and Ofcom could investigate broadcasters more quickly.

A more aggressive and assertive use of financial and legal powers, including unexplained wealth orders and the Magnitsky Amendment to make the UK a less welcoming environment for criminals and corrupt politicians.

Andrew Mitchell, a former Conservative international development secretary, said: “Boris is a bit like a medieval pirate whose eyes have alighted on this plump Spanish galleon loaded with bullion and he wants to board it and plunder it.”