KEY POINTS:
The United States is moving towards ending its military control of Iraq by agreeing to withdraw combat troops from Iraqi cities and towns by next June and from the rest of Iraq by 2011, according to Iraqi and American negotiators.
The withdrawal of US troops to bases outside the cities, towns and villages would make the Iraqi government, whose security forces number half a million men, the predominant military power in Iraq for the first time since the US-led invasion of 2003.
"By June 2009, if security progress continues, there would be no need for US troops in city centres," the Iraqi Foreign Minister, Hoshyar Zebari, told The Independent in a phone interview.
"The US would leave for bases outside the cities." The decision on whether or not security had improved sufficiently for US forces to withdraw next June will be taken by a joint US-Iraqi ministerial committee, he added.
Mr Zebari was eager not to describe the US pull-back as a withdrawal and it might still be rejected by senior Iraqi political leaders.
But in reality the US is accepting a timetable for a withdrawal, something that it resolutely refused to do in the past.
The Iraqi Prime Minister, Nouri al-Maliki, wanted the removal of US combat troops by the end of 2010, but has compromised on 2011.
The accord is likely to have a significant impact on the outcome of the US presidential election in November.
It should benefit the Democratic candidate, Barack Obama, since the timetable for a withdrawal is not so different from his plan to remove one combat brigade a month over 16 months.
It also makes it difficult for the Republican contender, John McCain, to say that US troops should stay until victory or to denounce Mr Obama as an unpatriotic defeatist.
At the same time, Mr McCain may benefit from the security agreement defusing the Iraq war as a political issue and making it more difficult for the Democrats to portray him as a dangerous hawk.
The agreement is "a sea-change from what the Americans originally proposed in March," according to an Iraqi political leader who saw a recent version.
He said Mr Maliki would like to see US forces pull back into about 20 bases and that they would not have an automatic right to patrol within cities and towns.
This means the US will not be able to support its local allies, such as the Sunni 103,000-strong al-Sahwa Awakening Movement, which is paid by the US but is hostile to the Shia-Kurdish government.
The original US draft for a security agreement to replace the United Nations mandate which runs out at the end of the year appeared to continue the American occupation.
When its terms were leaked in June, there was a nationalist backlash in Iraq against its terms.
This coincided with the Iraqi army regaining control of Basra, Sadr City and the province of Amara, which had been under the control of Shia militias.
The growing confidence of the Iraqi army that it can act without US military back-up has made it possible for Mr Maliki to demand more limitations on US authority.
Iraqi negotiators have been eager to end legal immunity for US forces.
Washington has conceded that private security contractors, of whom 35,000 out of 154,000 are armed security personnel, should no longer have immunity on or off US bases.
This is an important change because the private contractors outnumber US troops and play a crucial support role.
They are also widely detested by Iraqis because of their ill-discipline and involvement in incidents when Iraqi civilians have been killed.
The US has been determined to preserve the legal immunity of its regular armed forces.
According to one Iraqi negotiator, US soldiers will have immunity in their bases and when engaged in official missions, but if they engage in premeditated crimes outside their official role and off-base then a US-Iraqi committee will decide how they should be dealt with.
The Iraqi government has gone out of its way to reassure Iran that the US will not be able to use Iraq as a base for any attack on Iran.
Iran reacted furiously to the first draft of the accord, claiming it would turn Iraq into a US puppet state and saying it would be "an insecurity agreement and not a security agreement".
Standing beside the US Secretary of State, Condoleezza Rice, at a press conference, Mr Zebari said: "There are clear articles [in the agreement that] say that Iraq will not be used as a launching pad for any aggressive acts against neighbouring countries."
- INDEPENDENT