The Defence Secretary, Des Browne, yesterday announced his intention to withdraw "thousands" of troops from Iraq by the end of next year.
Mr Browne's remarks stopped short of a full exit strategy but reinforced the message by the Foreign Secretary, Margaret Beckett, last week that the withdrawal of British troops from Iraq would start next spring.
Speaking at Chatham House in London, Mr Browne said the number of British troops in Iraq by the end of next year should be "significantly lower, by a number of thousands".
But the Defence Secretary warned that when British troops started to "draw down", the number of insurgent attacks may rise.
The exit strategy dovetails with the controversial comments last month by Sir Richard Dannatt, chief of the general staff, who said the presence of UK forces "exacerbates the security situation" and they should "get out some time soon".
Mr Browne dismissed the idea of an Iraq split along Shia, Sunni and Kurdish lines, saying that "even Syria" was showing signs of support and had re-established diplomatic links with Iraq.
His comments came as the outgoing UN secretary general, Kofi Annan, said Iraq was nearly in civil war. "Given the developments on the ground ... we are almost there," he said.
The handover of power from Mr Blair to Gordon Brown could coincide with the start of the withdrawal. One senior minister said the Defence Secretary was signalling that Britain would no longer attempt to install the same level of democratic control in Basra as the English counties. "We're not talking about Surrey," said the source.
The US President, George Bush, yesterday left for key discussions with Iraq's Prime Minister as a high-level study group in Washington prepared to urge him to embrace direct talks with Iran and Syria as part of an exit strategy for the US from the three-and-a-half-year war.
As Mr Bush prepared for this critical round of diplomacy, Iraq's President, Jalal Talabani, arrived in Tehran yesterday for talks with his Iranian opposite number, Mahmoud Ahmedinejad, on ways of curbing the violence.
The report of the bipartisan study group headed by the former secretary of state James Baker is not due until next month. But a draft leaked to The New York Times suggests that while the panel favours contacts with Iran and Syria, it is far from agreed on a timetable for withdrawal that could see the present 145,000-strong US deployment reduced to 70,000 or 80,000 within a year.Reuse content