The final withdrawal of British troops from Iraq could be announced by the end of the year, the BBC has learned.
Discussions have begun about pulling forces out if the security situation continues to improve.
However, any withdrawal of troops could take many months after a political announcement is made.
Ministers are under pressure from the military to release the 4,000 troops who are currently serving in Iraq while pressures are mounting in Afghanistan.
Previous plans to reduce troop numbers to 2,500 were put on hold in March.
This followed a bout of violence dubbed the "battle of Basra".
At the peak of UK military activity in Iraq, in 2003, there were 26,000 soldiers posted in the country.
The UK handed over security responsibility in Basra province to the Iraqis in December last year
On a recent visit to Basra, Defence Secretary Des Browne was able to walk the streets of what he described as a "transformed city".
BBC political editor Nick Robinson said he understood that the government's next announcement on troop numbers would be made in July. This is unlikely to be the moment when full withdrawal will be announced. The discussions are said to have included Whitehall advisers.
The Ministry of Defence insisted "no decisions" had been taken about withdrawing troops from Iraq and said the suggestion that a final announcement could be made by the end of the year was "speculation
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