US President Donald Trump has urged Nato allies to commit 4% of their annual output (GDP) to military spending - double the current target.
The White House confirmed he had made the remarks during the Western military alliance's summit in Brussels.
Trump has also strongly criticised Germany over its defence spending and energy reliance on Russia.
Nato's secretary-general said the main focus should be on all members reaching the current target of 2% of GDP.
Jens Stoltenberg declined to answer a specific question about Trump's remarks, but told reporters: "I think we should first get to 2%, focus on that now... the good thing is that we are moving to that."
For decades after the end of the Cold War, he said, Nato countries had cut defence budgets as tensions fell - and now needed to increase them at a time when tensions were rising.
Previous US presidents have urged Europe to take more responsibility for their defence and reduce the burden on US taxpayers of maintaining forces in Europe long after the end of the Cold War - but none as bluntly as Trump.
In a statement, White House spokeswoman Sarah Sanders said: "During the president's remarks today at the Nato summit he suggested that countries not only meet their commitment of 2% of their GDP on defence spending, but that they increase it to 4%. The president raised this same issue when he was at Nato last year.
"President Trump wants to see our allies share more of the burden and at a very minimum meet their already stated obligations."
The Brussels meeting comes less than a week before Trump is due to hold his first summit with Vladimir Putin, in Helsinki, reviving concerns among US allies over his proximity to the Russian president.
President Trump shocked some by quipping that the Nato summit might prove harder than the Putin talks.
What is the spending row about?
Trump's main objection is that all but a handful of member states have still not increased their defence budgets to meet a goal of spending at least 2% of their annual economic output on defence by 2024.
Of Nato's 29 members, just five meet that target this year: the US, Greece, Estonia, the UK and Latvia.
However, several, such as Poland and France, are close to the mark.
At a news conference after the first meetings of leaders at the summit, Stoltenberg insisted that more united Nato than divided it.
"We have had discussions, we do have disagreements, but most importantly we have decisions that are pushing this alliance forward and making us stronger.
"In the history of Nato we have had many disagreements and we have been able to overcome them again and again, because at the end of the day we all agree that North America and Europe are safer together."
Is Trump committed to Nato?
So is this mission accomplished at Nato for Donald Trump? Has he achieved his goal of persuading his European allies to spend more on defence?
He began the day by calling them "delinquents" and ended it with smiles. The Nato summit communique contained the usual words about "turning a corner" in terms of defence spending, while recognising "the need to do more".
How much more and how quickly still remains an issue, with Trump suggesting that the benchmark Nato spending goal of 2% of GDP devoted to defence should be doubled to 4%. That is a level that all the allies apart from the US would struggle to attain.
But the real underlying issue remains Trump's commitment to Nato. Does he see it merely as a set of transactional relationships, or as an organisation enshrining the transatlantic partnership that has been the central element of European and US security since World War Two?
What did Trump say about Germany?
Trump clashed with Merkel ahead of the summit.
The US president accused Germany of only spending "a little bit over 1%" of its economic output on defence compared to the 4.2% spent by the US "in actual numbers".
Germany spends 1.24% of GDP on defence and the US 3.5%, according to the latest Nato estimate.
At a breakfast meeting in Brussels with Stoltenberg, the US leader also said: "Germany is totally controlled by Russia because they will be getting from 60% to 70% of their energy from Russia, and a new pipeline, and you tell me if that's appropriate because I think it's not and I think it's a very bad thing for Nato."
EU figures suggest Russia is responsible for between 50% and 75% of Germany's gas imports, but gas makes up less than 20% of Germany's energy mix for power production.
Trump made more conciliatory remarks on Wednesday after he and Merkel met on the sidelines of the Brussels summit, saying defence spending and trade had been discussed.
"We have a very, very good relationship with the chancellor. We have a tremendous relationship with Germany," Trump said.
But he later redoubled his criticism of Germany and other allies in a tweet.
How did Merkel respond?
She hit back, comparing German independence now with the time when she grew up in the former East Germany, a satellite of the then Soviet Union.
Merkel told reporters: "I am very happy that today we are united in freedom as the Federal Republic of Germany. Because of that we can say that we can make our independent policies and make independent decisions."
She added that Germany had put a huge proportion of its troops at Nato's disposal, particularly in Afghanistan.
Merkel said she had discussed migration and trade with Trump, and that she looked forward to further discussions as the US and Germany remained partners.