Tony Blair is directing his hopes towards a unity government emerging from the Iraqi elections, allowing the withdrawal of some British troops next summer.
The British prime minister, in Basra to deliver a pre-Christmas pep talk to troops, held out the prospect of some troop reductions next year, but said it could only happen when the Iraqis increased their capability.
"Most of us recognised that the army has built a quicker capability than the police.
It is why it is very important we get a good strong unity government out of the Iraqi elections so they can build up the army and police capability," he said.
Mr Blair said the troops he had spoken to in Basra "have been more upbeat about the Iraqi capability than I expected."
But the likelihood that the elections will create a nation divided between the Kurds, Sunnis, and Shias will be seen as an obstacle to Mr Blair's hopes.
Mr Blair brushed aside talk of divisions after the elections, saying "they have always been there." However, he admitted that "significant difficulties" still remained in spite of his optimism.
Mr Blair based some of his hopes on conversations with troops who said the Iraqis appeared to be running the recent elections unlike the earlier elections in January.
At a meeting with General George Casey, head of US forces, he was told that by next summer the Iraqis will be leading 75per cent of security operations next summer.
The Prime Minister conceded that British troops could still be in Iraq a decade from now.
He was asked about the prediction by Sir Jeremy Greenstock, the former British UN Ambassador, that British troops may still be in Iraq in five years.
"It depends on the number," said Mr Blair.
"We still have troops in Bosnia today but it's not the same number as ten years ago.
I'm not saying we will have or we won't have.
You have to judge that as you can."
In a robust message to the troops, delivered while standing on a tank loader, the Prime Minister said it was important to try to help Iraq to become a democracy: "The only way to do that is to provide security so the Iraqi forces build up and we can eventually draw down our capability."
He told the troops: "If we manage to deal with terrorism here we will deal a body blow to terrorism world-wide.
You are right at the front line.
"I know how dangerous it is.
Sometimes you have lost good colleagues and it is difficult in this situation but one thing is for sure - when you look back at this time you will be very proud of what you have done here."
Wearing a blue open necked shirt, black blazer and blue chinos, the Prime Minister flew in the cabin of a Hercules to a base in Basra before flying on by helicopter to a logistics centre which has come under fire recently from mortars.
His visit was surrounded by tight security.
The troops said they were looking forward to welcoming Jim Davidson, the Tory-supporting comedian, for a Christmas show.
Before leaving, Mr Blair told members of the famous Desert Rats that they were doing a vital job in the fight against terrorism.
He repeatedly made it clear he believed the Iraqi elections had turned the corner.
"This country is potentially very wealthy.
I don't think people will think it is very sensible to divide it.
All they want is the rule of law and it will take off," he said.
"One thing is clear: the people of Iraq do not want to create (states within states).
Large numbers of Shias here want to run their own country.
If we were to walk away and let them all get on with it what kind of solution would that be? There are big challenges.
I am not shrinking away from that."
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Blair sees unity government emerging from Iraqi elections
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