Conservative leader David Cameron told the Commons that the announcement would be "welcomed in this House, in the country and especially to the families of those serving in Iraq over the coming months."
But he said that the security situation in Basra remained "dire" and urged Mr Blair finally to accept the need for an inquiry into the Iraq war to "learn the lessons" of "many bad mistakes".
Liberal Democrat leader Sir Menzies Campbell, whose party opposed the war in Iraq, said the target should be the full withdrawal of British troops by the end of October.
He added that the "unpalatable truth" was that Britain was leaving behind a country on the brink on civil war.
"This is a long way short of the beacon of democracy for the Middle East which was promised some four years ago," he said.
The proposed cut in numbers of British troops comes at the same time as 21,500 more US troops are being sent to Iraq.
The White House is eager to put a positive spin on this, but there's really no denying what's going on. With Tony Blair due to step down as Prime Minister some time this Spring, George W. Bush and Dick Cheney will lose their biggest supporter of the war in Iraq (next to al-Qaeda). Anticipating the failure of the U.S. troop surge, Blair seems to have concluded now is the time to declare victory and begin the pullout.