The first details of the UK's long march out of Afghanistan were revealed on Thursday when the defence secretary, Philip Hammond, announced Afghan forces were now strong enough to allow 500 British combat troops to return home.

In a statement to the House of Commons, Hammond said 36 checkpoints and patrol bases in Helmand province had been handed over to the Afghan police and army over the last six months, and that two of the UK's satellite headquarters would be merged into one. However, he insisted the UK would still have combat troops in Afghanistan until the end of 2014, the date set for full transition of security from Nato to local forces.

Though ministers announced last year that the British contingent in Afghanistan would come down from 9,500 to 9,000 this year, the Ministry of Defence said the withdrawal would be conditions based.

Hammond told MPs the security situation in the three districts of central Helmand where the British are based was now "unrecognisable compared with the start of operations in 2006".

This has allowed the chief of the defence staff, General Sir David Richards, to recommend the withdrawal of 500 mostly combat troops as well as some logistical support.

Two hundred other troops will be moved from more frontline positions to "ground-holding" support roles.

Hammond said the insurgency still posed a genuine threat but claimed the Afghan forces were improving all the time. He said this had allowed some important construction work, including 30 extra schools and 29 health clinics.

"Prosperity will be a critical weapon in the battle against the insurgency," he said "In the last year alone, income levels in Helmand have increased by 20%."

Hammond said that in the biggest Afghan-led operation so far, an insurgent heartland within the Helmand river valley had been cleared.

"The Afghans cleared more than 200 compounds, made safe 44 improvised explosive devices, found seven bomb-making factories and confiscated over 145 kilograms of homemade explosives.

"The success of that operation further demonstrated their increasing professionalism and capability. The reality on the ground is that Afghan forces are increasingly taking the lead."

Earlier this week UK commanders just returned from Afghanistan said central Helmand had been insulated from the uproar in the rest of the country provoked by the behaviour of American forces.

The US has had to apologise for burning copies of the Koran, and for a film that showed US soldiers urinating on dead Afghans. An American staff sergeant, Robert Bales, is on trial for shooting 16 Afghan civilians in March.

Despite the progress in central Helmand, some British commanders remain privately concerned about how the Afghans will cope when 16,000 US Marines withdrawal from Helmand in the coming months - and whether that will lead to a rise in Taliban activity in areas the British have tried to secure.