"Iraq has demonstrated a steady effort to install a democratic government and the country's security has improved while the Iraqi people are now making their own effort to rebuild their country," he said in a statement.

Japan has airlifted equipment and troops since 2006 from Kuwait to Iraq, including Baghdad, in support of the US-led forces.

Aso said that Japan will continue economic aid and technology support to Iraq.

The UN Security Council resolution authorising the presence of US troops in Iraq expires later this year.

Iraq is also reviewing the activities of multinational forces in the country.

Debating role

Japan is now debating whether to continue its anti-terrorism maritime mission in the Indian Ocean, which also expires in December.

The refuelling mission began in 2001 to support US-led forces in Afghanistan but Japan had to suspend it late last year after the political opposition blocked its extension in parliament.

The Iraq and Afghan missions have tested the limits of Japan's pacifist constitution and divided public opinion.

Critics oppose them as a violation of the nation's charter written in 1947 by the US, which bans Japan from engaging in warfare.