A decision by Manila to pull its troops out of Iraq in exchange for the life of a Philippine hostage sets a "bad precedent" and may encourage more kidnapping, the US selected Iraqi foreign minister and the US State Dapartment warned on Sunday.

Their comments came as the last 35 members of a Philippine police and military contingent prepared to leave Iraq by Monday and a senior official in Baghdad expressed hope kidnapped Angelo de la Cruz would be freed on the same day.

"We respect the Philippine government's decision but this came in response to some demands," Iraqi Foreign Minister Hoshyar Zebari told a joint news conference with US Deputy Secretary of State Richard Armitage who is on a lightning 24-hour trip to Iraq.

"This in my view and the view of the Iraqi government has set a bad precendent and sends the wrong messages. Terrorists won't be rewarded otherwise this will repeat itself," Zebari said.

His words were echoed by Armitage, although he insisted it would not affect relations between the United States and the Philippines.

"We too very much regret the decision of the Philippine government for the same reason as my esteemed colleague has outlined"

Richard Armitage,
US Deputy Secretary of State

"We too very much regret the decision of the Philippine government for the same reason as my esteemed colleague has outlined," Armitage said.

"We have had differences of opinion before. We will have them again. That is what it means to be a sovereign government. They make sovereign decisions and we may not like it but we must respect it."

The Philippines' pullout was moved up from August 20 last week to save the life of de la Cruz whose abductors have threatened to kill him unless Manila recalled the contingent a month ahead of schedule.

A senior Philippine official in the Iraqi capital was hopeful the crisis that has gripped his country for more than a week would soon be over.

"God willing, the promise is that when all troops leave, the hostage will be released, and all troops will leave tomorrow," the Filipino official in Baghdad told reporters.

A Philippine military officer at the embassy confirmed that the remaining troops would be out of the country by Monday.

"We are going to Kuwait and from there on our way to the Philippines," said Colonel Roman Yogyog, noting that the departing contingent numbered 35.