The defence ministry established the study commission on security policy in July 2023, and tasked it with outlining security policy adapted to current threats.
Its report contained more than 100 recommendations, chiefly concerning Swiss neutrality, international cooperation, armaments policy and the orientation of security strategy.
Switzerland's long-standing position has been one of well-armed military neutrality.
The landlocked nation is neither in NATO nor the EU, while its neighbours Germany, Italy and France are in both, and Austria is an EU member.
The study said the security picture in Europe had sharply deteriorated, notably due to the Russian invasion of Ukraine in 2022, power politics and increasingly destabilised crisis regions.
"The neutrality policy must be revised, more focused on its security function and applied more flexibly," a statement said.
A majority of the commission recommended that the neutrality policy be more closely aligned with the United Nations Charter, with greater consideration given to the distinction between aggressor and victim.
"Switzerland cannot represent a security gap in Europe," and its location surrounded by the EU makes the need for defence cooperation "clear", the report said.
"Neutrality is no obstacle to cooperation with NATO in security policy matters," it added.
"Cooperation with NATO and the EU should be further deepened with the aim of a common defence capability and developing a genuine defence cooperation," the statement said.
- Defence spending, arms re-export -
While Switzerland has matched the EU's economic sanctions on Russia, it has refused to send arms to Kyiv -- or allow countries that hold Swiss-made weaponry to re-export it to Ukraine.
However, a majority on the commission wanted to lift the war material re-export ban -- changing the current interpretation of strict military neutrality.
The report's author said Russia's aggression in Ukraine opened the door to a conflict with NATO -- and said Switzerland's neutrality was no guarantee it would not be attacked.
The study recommended increasing the defence budget to one percent of gross domestic product by 2030.
The hard-right Swiss People's Party, the country's largest, said it "firmly rejected" rapprochement with the EU and NATO, "as this would mean the end of Switzerland's neutrality".
The centre-left Social Democratic Party, the second-biggest party, found the report's thrust "wrong and contradictory", saying there was no need to ramp up military spending to face what the report considers a "highly unlikely attack" on Swiss territory.
A key facet of its national identity, Swiss neutrality traces its roots back to 1516 and has been internationally recognised since 1815.
Switzerland cannot participate in wars between other countries, forge military alliances, or grant troops, weapons or territorial transit rights to warring parties.
All men are obliged to do military service and attend refresher courses for years afterwards.
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