The Argyll and Sutherland Highlanders have been downgraded to a ceremonial company for public duties in changes to the British Army announced by Defence Secretary Philip Hammond.
The shake-up retains the five historical cap badges within the Royal Regiment of Scotland, which goes from having five battalions to four, with the new smaller company.
Major-General Nick Eeles, the top officer in Scotland, said the decision will be seen as good news in the Royal Regiment of Scotland following speculation that an entire battalion could be lost.
"I think what we've got is a balanced solution across the Army," he said.
"When you have cuts as deep as this, there is going to be very painful news in certain places.
"I certainly wouldn't underplay the painful news that many units will be receiving today. As far as Scotland is concerned, clearly keeping a public duties incremental company is better than having lost a complete battalion."
He added: "Given what has happened elsewhere in the Army, the Royal Regiment of Scotland was probably expected to lose a battalion as a fair share of the cuts being passed around. The fact that they haven't lost a complete battalion will be seen as good news within the regiment."
The company, currently based in Kent, will be asked to carry out public duties, such as parading outside the Palace of Holyroodhouse and Edinburgh Castle. The soldiers will rotate across the Royal Regiment of Scotland, meaning no-one should only serve in the ceremonial role.
The change was criticised in the Commons by shadow defence secretary Jim Murphy, who said: "The Argylls have been reduced to guarding castles and being the backdrop to Japanese tourists' photographs."
Maj Gen Eeles rejected that claim, arguing: "They are anything but a backdrop. They're no different in reality from the regular battalions that undertake public duties. The individuals within those incremental companies are rotating between regular units that are going out on operations to Afghanistan and carrying out a public duties role."