On Sunday officials said that approximately 12,000 U.S soldiers are expected to leave Iraq by September.
The announcement came just hours after a Baghdad suicide bomber killed about 30 people in a chilling reminder of the nation's unstable security.
The withdrawals, which will most likely come from Baghdad and Anbar province, once main battlefields of the war, are the first step in keeping with President Barack Obama's pledge to end America's role in the war.
Following the expected withdrawal the number of US troops in Iraq will be down to 120,000- still a substantial number.
The US is also expected to give over 74 facilities and areas under its control to the Iraqis by the end of March.
All 4,000 British soldiers remaining in Iraq are also scheduled to leave by September.
A U.S. spokesman, Maj. Gen. David Perkins, said Iraq's security has greatly improved, moving from a very unstable to a stable position, the AP reported. He said violence was at its lowest level since the summer of 2003.
Sunday’s suicide attack marks the worst in Baghdad in months, injuring about 60 people and killing dozens killed.
The suicide bomber detonated his explosives as he drove his motorcycle into a group of people, many of them police recruits, waiting near a side entrance of Baghdad's main police academy in a mainly Shiite area of the city.
The heavily fortified academy has been hit by several bombings. A Dec. 1 suicide bombing there killed at least 33 and wounded dozens, including four U.S. soldiers and an Iraqi general.
The scene was cordoned off allowing only emergency vehicles to enter. Shots were fired in the air by nervous Iraqi troops to prevent onlookers and reporters from getting too close.
No group has yet claimed responsibility for the blast, but suicide bombings are the signature attack of Sunni religious extremists, including al-Qaida.
Iraqi officials provided conflicting casualty tolls, as is common in the chaotic aftermath of bombings.
According to medical officials in the area, 32 people were killed, including 19 recruits, nine policemen and four traffic police. Another 60 people have been left wounded.
According to an Interior Ministry official said the death toll was 28 and 57 were wounded. The officials spoke on condition of anonymity because they weren't authorized to release the information.
Extremists increasingly have targeted Iraqi forces as they take over the country's security so American troops can go home. Last week, President Obama announced the end of all combat missions in Iraq by the end of August 2010, leaving up to 50,000 U.S. soldiers to train and assist Iraqi security forces. All U.S. troops are to leave Iraq by the end of 2011.
Currently there are about 135,000 U.S. troops in Iraq, and their withdrawal will be gradual at first to leave most in place for parliamentary elections at the end of this year. The 12,000 troops, which make up two of 14 combat brigades in Iraq, will not be replaced.
Still, troop levels in Iraq are more than double what the Obama administration is sending to Afghanistan, where as many as 55,000 soldiers will be stationed by this summer.