Story Highlights • Blair announces plans to withdraw 1,600 troops from Iraq "in coming months"

• British PM says troops to remain "as long as we are wanted and have a job to do"

• Denmark to also withdraw 460-strong contingent of coalition troops by August

• Remaining British troops to play support and training role for Iraqi security forces

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LONDON, England (CNN) -- British Prime Minister Tony Blair on Wednesday announced plans for the imminent withdrawal of around 1,600 of his country's troops from Iraq.

In a statement to lawmakers in the House of Commons, Blair said the UK's coalition contingent based in Basra would be reduced in the coming months -- but only if Iraqi security forces could secure the southern part of the country.

"The actual reduction in forces will be from the present 7,100 -- itself down from over 9,000 two years ago and 40,000 at the time of the conflict -- to roughly 5,500," Blair said.

He said the withdrawal reflected the relative stability in Basra, where the sectarian rifts that have turned Baghdad and northern Iraq into a powderkeg are less of a problem. (Map)

"The next chapter in Basra's history will be written by Iraqis," Blair said.

Britain's plans prompted U.S. Secretary of State Condoleezza Rice, speaking at a news conference in Berlin with German Foreign Minister Frank-Walter Steinmeier, to reject suggestions the American-led coalition in Iraq was crumbling.

"The British have done what is really the plan for the country as a whole, which is to be able to transfer security responsibilities to the Iraqis as conditions permit," she said.

Rice said that "the coalition remains intact and in fact the British will have thousands of soldiers deployed in Iraq in the south."

Blair said British troops would increasingly play a support and training role with Iraqi forces assuming responsibility for security operations. (Watch Blair announce troop withdrawal .)

He said there would be no diminution in British combat resources and said a military presence would remain into 2008 "for as long as we are wanted and have a job to do."

"The speed at which this happens depends, of course, in part on what we do, what the Iraqi authorities themselves do, but also on the attitude of those we are together fighting."

More than 130 British troops have been killed in Iraq since the U.S.-led invasion in 2003.

Meanwhile Denmark on Wednesday announced it would withdraw its contingent of coalition forces by August. Lithuania also said it was considering withdrawing its 53 troops. Denmark's 460 soldiers serve under British command in Basra. (Full Story)

U.S. Secretary of State Rice said the moves were in line with long term plans for Iraq and would not compromise security or the strenght of the coalition.

"The coalition remains intact and in fact the British will have thousands of soldiers deployed in Iraq in the south," she said at a joint news conference with German Foreign Minister Frank-Walter Steinmeier, Reuters reported.

"It is the plan that as it is possible to transfer responsibility to the Iraqis, that coalition forces would no longer be needed in those circumstances," she added.

Blair's statement followed a weekend television interview in which he declared that the British mission in Basra -- codenamed "Sinbad" -- had been "completed" and "successful."

"The issue is the operation that we have been conducting in Basra is now complete... And it has been successful as an operation and as a result there has been reconstruction that has come in behind it and we have been able to make real progress." (Watch what may be the factors behind the decision )

On Wednesday the Sun newspaper reported that the first British troops would return home "within weeks" and said that 3,000 will follow by the end of the year.

The Guardian and The Sun reported that all British forces would leave Iraq by the end of 2008.

The Guardian, quoting defense sources, said British troops would continue carrying out long range patrols in Maysan province along the border with Iran from a single base in Basra.

Defence officials have been encouraged by a campaign to root out criminals and Shia militia supporters from the Basra police force, the paper reported.

CNN's Nic Robertson said British forces had adopted a "softly-softly approach" to policing Basra in comparison with their American allies in Baghdad.

"The assessment has clearly been made for political reasons or because the situation is much better now in Basra that this is a safe operating status that can be put in place there," said Robertson.

"They would go out with berets on their heads instead of helmets, they would patrol the streets more frequently than U.S. troops typically would and try to engage the local population. But in the last year that has not been as successful a tactic as it was in the first year or so."

The British announcement came one day after the Iraqi Army division based in Basra transferred from coalition command to Iraqi command. That Iraqi unit "is now -- for the first time -- taking its orders direct from an Iraqi headquarters in Baghdad," according to a statement on Britain's Ministry of Defense Web site.

In Basra many Iraqis greeted the news with relief, while others voiced fears the British withdrawal was premature amid fears over tensions between Shia parties bubbling beneath the surface.

Salam al-Maliki, a senior official in the bloc loyal to radical young cleric Moqtada al-Sadr which has long opposed a foreign presence in Iraq, said any violence in the city would cease once the foreign troops have left.

"The militias and militant groups in these areas only fired their weapons at the occupier and when they go, all of the violence here will end," he said. (Full Story)

U.S. sends more troops to Iraq

In Washington, the White House welcomed the British move, even as the U.S. sends more troops into Iraq in an effort to put down a wave of sectarian violence in Baghdad and pacify Anbar province, the heart of the Sunni insurgency.

"The president views this as a success," National Security Council spokesman Gordon Johndroe said. "The president wants to do the same thing, to bring our troops home as soon as possible.

"The president is grateful for the support of the British forces in the past and into the future. While the United Kingdom is maintaining a robust force in southern Iraq, we're pleased that conditions in Basra have improved sufficiently that they are able to transition more control to the Iraqis."

"The United States shares the same goal of turning over to the Iraqi security forces and reducing the number of American troops in Iraq," the statement added.

Johndroe said Blair briefed President Bush about the plan during one of their "routine" calls Tuesday morning.

But Democrat Senator Ted Kennedy called Blair's announcement a "stunning rejection of President Bush's high risk Iraq policy."

"No matter how the White House tries to spin it, the British government has decided to split with President Bush and begin to move their troops out of Iraq. This should be a wake up call to the administration," Kennedy said in a statement.

"Eighteen other countries have already withdrawn or dramatically reduced their troop presence in Iraq. A majority of the American people voted last November for a changed policy in Iraq. A majority of the House and the Senate, a unanimous Baker- Hamilton Commission and numerous generals have rejected the Administration's policy in Iraq. And now our country's strongest ally has rejected it."

Political damage

Opposition to the war has hurt Blair politically, with his ruling Labor Party losing seats in Parliament and in local elections in the past two years. The prime minister announced in September that he would leave office within a year.

CNN's Robin Oakley said the announcement of plans to withdraw troops from Iraq would be seen as a "turning point" by Blair as he prepares for his exit from government.

"Tony Blair wants to show he got things moving in the right direction before he goes," said Oakley.

Shadow foreign secretary William Hague of the opposition Conservative Party said British forces in Iraq were overstretched and had probably reached the limit of what they could "usefully achieve."

Anti-war protester Lindsey German of the UK's Stop the War Coalition said the move was an admission that the troops were not doing any good: "[Blair] needs to come clean on what a mistake, and what a disaster, the war has actually been."

Britain contributed about 46,000 soldiers, sailors and air force personnel to the U.S.-led invasion of Iraq in March 2003. More than half those troops were withdrawn within two months of the invasion, leaving the remaining contingent in Basra.

News of the withdrawal comes three days after it was reported that Prince Harry would deploy with his unit to Iraq in April or May. (Full story)

CNN's Suzanne Malveaux contributed to this report.