AMERICAN forces are paying Sunni insurgents hundreds of thousands of dollars in cash to switch sides and help them to defeat Al-Qaeda in Iraq.

The tactic has boosted the efforts of American forces to restore some order to war-torn provinces around Baghdad in the run-up to a report by General David Petraeus, the US commander, to Congress tomorrow.

Petraeus will tell Congress that there has been great progress at a local level in Iraq following a surge in the number of troops this year, but little sign of political reconciliation.

In a letter to US troops, the general wrote that “local Iraqi leaders are coming forward, opposing extremists and establishing provisional units of neighbourhood security volunteers”.

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The Sunday Times has witnessed at first hand the enormous sums of cash changing hands. One sheikh in a town south of Baghdad was given $38,000 (£19,000) and promised a further $189,000 over three months to drive Al-Qaeda fighters from a nearby camp.

Petraeus is to ask Congress tomorrow for more time to build political reconciliation. He is under pressure to bring home a brigade of about 4,000 troops, but has told President Bush that it will not be possible before January at the earliest.

Administration officials say Petraeus hopes to report to Congress again in March, buying six more months for the surge to work before troop rotations make it impossible to keep 160,000 US forces in Iraq without overstretch.

Bush is to lay out his vision for the future of Iraq in an address to the nation this week.

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