By Thomas Harding, Defence Correspondent
The Prime Minister is expected to make an announcement in the New Year laying out the timetable for the pull out after more than six years in the country.
While a replacement brigade of another 4,000 troops is already training to replace the current force, no decision has been made yet on whether any elements will be sent to Afghanistan.
But it is understood that the fleet of half a dozen medium list Merlin helicopters and a number of reconnaissance drones will be sent to help the fourth in Helmand almost immediately.
With the Americans formulating their final exit plans with the Iraqi Government, that will be finalised once the President-elect, Barack Obama, takes power, the British are expected to conclude the final state of their forces in Iraq in the coming weeks.
It is expected that a number of troops will remain to continue the "Sandhurst in the desert training" of Iraqi officers and a few hundred Royal Navy personnel to mentor Iraqi sailors in the port south of Basra.
The first changeover of troops is expected to begin when the headquarters of an American division headed by a two-star general takes over from the British at Basra airbase in March.
It is expected to be followed by an American brigade that will help continue training Iraqi forces and will secure the US withdrawal route south into Kuwait.
The British army's 20 Brigade has just arrived in Basra and will be the last sizeable force to deploy to Iraq with their six month tour ending at the beginning of June unless there is a major decline in security.
Much of the withdrawal strategy depends on whether the Iraqi provincial elections go off peacefully on January 31. If they do the British pull-out could happen quickly.
"The withdrawal will be a very gradual thing and then a very steep thing," the defence force said.
In the last eight months Basra city has dramatically stabilised after the Iraqi army proved it could hold its own during the Charge of the Knights Operation in which with British and American help it stamped out the insurgents.
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