US troops could be withdrawn from Iraq's cities by the middle of next year under a new security deal being hammered out by the American and Iraqi Governments.
The security deal will come into effect when the United Nations mandate governing military operations in Iraq expires at the end of the year.
The new agreement will set out a broad withdrawal timetable for US troops.
The first stage would have them leaving Iraq's big cities by the middle of next year and out of the country altogether by 2011.
US Secretary of State Condoleezza Rice, who made a surprise visit to Baghdad overnight, says the new deal has been made possible by the success of the so-called military surge.
"The reason we are where we are today is that the surge worked. Iraqi forces have demonstrated that they are strong and getting stronger," she said.
The US and Iraq hope to sign the new deal within the next few months.