Smith made the announcement after spending several days in Washington meeting with U.S. Vice President Dick Cheney, Defense Secretary Robert Gates and Secretary of State Condoleezza Rice, Voice of America reported from Sydney.

The decision reverses Australia's commitment to Iraq made before last November's election under former Australian Prime Minister John Howard.

"We are sticking absolutely to the election commitment that we took to the Australian people," Smith said, adding he didn't see it as straining relations between Washington and Canberra.

He said the government was considering other ways to help in Iraq apart from a combat role.

There were also local reports the country would bolster its 1,000-person force of combat troops and Special Operations fighters in Afghanistan once the Iraq deployment ended, the report said.