Britain will cut its military presence in Iraq by more than half to leave 2,500 troops there from the first half of next year, British Prime Minister Gordon Brown said on Monday.
In a long-awaited statement to parliament, Brown said troop levels would be drastically reduced after Britain hands over power of Basra province to Iraqi security forces in the coming months.
Britain's troop reductions in southern Iraq has fueled talk of strains between London and Washington, although Brown's government has repeatedly insisted it is working closely with US President George W. Bush.
The first reduction, from 5,500 troops at the start of last month down to 4,500, would come immediately after Iraqi security forces assume control within the next two months, with 2,000 more being pulled out by early next year.
"We plan, from next spring, to reduce force numbers in southern Iraq to a figure of 2,500," he said.
At the peak of combat operations in the US-led invasion against former president Saddam Hussein in March and April 2003, Britain had 46,000 troops in Iraq.
"That's a very substantial reduction in the numbers but it is only possible because the Iraqis are now able to take the responsibility for security themselves," Brown told lawmakers.
Brown outlined "two distinct stages" to the handover: the first would see British forces training and mentoring Iraqi security forces, securing supply routes, protecting the Iraq-Iran border and provide back-up to local troops.
In the second, he said British forces would retain a more limited ability to intervene by force with the main focus on training and mentoring.
The prime minister told his monthly news conference earlier Monday that the withdrawal of British troops was not an "admission of defeat", but a sign of the increasing capacity and ability of the local security services.
Brown said that Britain will help Iraqi local staff who have worked for British forces to settle in Iraq and elsewhere, including Britain in certain circumstances.
Local staff including interpreters and translators who have worked for Britain for 12 months or more will be eligible for financial and other support, he said.
"I am pleased to announce today a new policy which more fully recognizes the contribution made by our local Iraqi staff who work for our armed forces and civilian missions in uniquely difficult circumstances," he said.
"Existing staff who have been employed by us for more than 12 months and have completed their work will be able to apply for a package of financial payments to aid resettlement elsewhere in Iraq or elsewhere in the region or -- in agreed circumstances -- for admission to the UK," he said.
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