Dr Reid said troop numbers in Iraq would fall by 500 after routine changes in deployments next month, leaving 8,000 British soldiers in the country.
He said the changes were "relatively minor adjustments" but hinted that the US-led coalition would consider handing parts of the country over to Iraq security forces as more local police and troops are trained.
But he insisted that giving a deadline for pulling out troops would "send a postcard to terrorists" and encourage the fighting to continue.
He told MPs: "The biggest obstacle now to our leaving Iraq is the actions of the terrorists themselves. Terrorist activity only delays our leaving Iraq. It does not hasten our leaving Iraq."Reuse content