The White House confirmed that US General George Casey, commander of US forces in Iraq, had drawn up a withdrawal plan but stressed that implementation would depend on whether Iraq's fledgling security forces can fill the gaps left by the pullout.
The New York Times has reported that General Casey gave a classified briefing at the Pentagon last week to outline a drawdown plan.
The blueprint calls for reducing the number of US combat brigades from 14 to five or six by December 2007, starting with two combat brigades that would rotate out of Iraq in September without being replaced, the Times said.
Combat brigades, which generally have about 3,500 troops, do not make up the bulk of the US force in Iraq.
US President George W Bush said that "one of the things that General Casey assured me of was that whatever recommendation he makes, it'll be aimed toward achieving victory."
"In terms of our troop presence there, that decision will be made by General Casey, as well as the sovereign government of Iraq, based upon conditions on the ground," Mr Bush said.
The US President is facing growing pressure to call home at least some of the 130,000 US soldiers fighting in Iraq.
Mr Bush’s Republican party is worried that the issue could cost them dearly in November congressional elections.
Bloody day in Iraq
Bomb attacks at two crowded Iraqi markets killed at least 15 people and wounded dozens, a day after Prime Minister Nuri al-Maliki unveiled a national reconciliation plan.
A bomb in a bag exploded in the market in Hilla, a mainly Shi'ite town south of Baghdad, killing at least eight people.
Around the same time, a bomb on a parked motorcycle killed seven people and wounded 25 at a market in the mainly Shi'ite village of Khairnabat, northeast of Baghdad.
It was one of the bloodiest days in the country since al Qaeda in Iraq leader Abu Musab al-Zarqawi was killed in a US air strike on June 7.
At least 11 other people were reported killed in shootings and bombings across Iraq.
There was confusion over the Hilla death toll. Interior Ministry sources in Baghdad, citing Hilla police, said 17 people were killed and 25 wounded.
But Hilla police spokesman Muthana al-Mamoury said eight people were killed and 58 wounded.
Hilla, situated 100 km south of Baghdad and surrounded by Sunni Arab areas from which insurgents draw support, has been the scene of numerous bombings over the past two years.
Mr Maliki's reconciliation plan has come in for criticism from both sides of the sectarian divide, 24 hours after parliament accepted the strategy, which is short on detail.
Iraq's most senior Sunni Arab politician, Vice President Tareq al-Hashemi, said the plan set no withdrawal date for US forces and that Mr Maliki, a Shi'ite, was wrong to rule out peace negotiations with followers of Saddam Hussein.