Britain and Iraq have agreed to start negotiations on an accord to enable British forces to stay in the country beyond the end of this year, although the size of the deployment is to shrink next year to several hundred from the current 4,100.

The announcement came after John Hutton, the new Defence Secretary, met Nouri al-Maliki, the Iraqi Prime Minister, on his first trip to Baghdad.

“I hope we can reach an agreement as soon as possible,” Mr Hutton said, while visiting a small British military base inside the fortified green zone of Baghdad. “It is very, very important that we get this agreement reached and I am absolutely confident that we will do that.”

The British agreement with Iraq will be based on an agreement between Baghdad and Washington on the status of US forces in the country. The draft version of that pact ran into trouble yesterday when the ruling Shia political bloc in Iraq called for changes.

The US and British accords are designed to replace a United Nations Security Council mandate authorising the presence of foreign forces in Iraq, which expires at the end of the year. Mr Hutton said that failure to seal the deals in time would be worrying.

“I would be very concerned,” he told The Times in a brief interview at the military base where he spent an hour chatting to soldiers, inspecting their living quarters and climbing into a lookout post that offers a picturesque view of the Tigris river.

The confidence of the Defence Secretary may be misplaced. The United Iraqi Alliance, the Shia political bloc that includes the Dawa party of Mr al-Maliki, said that its leaders had reviewed the draft US-Iraq pact and were unhappy with certain parts.

“Beside the positive points that were included in this pact, there are other points that need more time, more discussion, more dialogue and amendments to some articles,” the group said in a statement. It did not say which parts it objected to, but said that a committee would gather comments on it.

The response to the draft text will be a blow to efforts by Mr al-Maliki to have the document passed by parliament before the end of the year. As a last resort, Iraq could seek an emergency extension of the UN mandate.

Mr Hutton, the former Business Secretary who took over the defence portfolio after a Cabinet shake-up at the start of the month, emphasised that the British military mission in Iraq will undergo a fundamental shift in 2009.

“I think this will be a very critical moment in our military engagement,” he said, adding that numbers could drop to several hundred. “They will be involved in ongoing training and support roles,” Mr Hutton said. The remaining 4,100 British troops, a far cry from the 40,000-strong force that took part in the invasion in 2003, are based mainly in the province of Basra.

Mr al-Maliki told The Times that he no longer needed British combat forces, but would like some troops to remain to help with training.

After spending yesterday in meetings around the green zone, Mr Hutton flew to Basra, which earlier this year was overrun with militia and was out of bounds for visiting British officials.

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