The Government could announce the withdrawal of British troops from Iraq by the end of the year, it has been reported.
The BBC said discussions have begun about pulling forces out of the country if the security situation continues to improve.
The broadcaster said the next announcement on troop numbers by Defence Secretary Des Browne will be made in July, but is unlikely to be the moment when full withdrawal will be announced.
There are currently about 4,000 British soldiers concentrated at the Basra air base on the outskirts of the city.
Any withdrawal of troops could take months to happen once a political announcement is made.
Plans to withdraw 1,500 troops from Iraq, seeing the total fall to 2,500, were put on hold at the start of April as a result of the fighting between Iraqi forces and Shiite militias.
The intention to cut British forces was first signalled by PM Gordon Brown during a surprise visit to Iraq last October when speculation that he was about to call a general election was at its height.
The Ministry of Defence told the broadcaster "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".
