The Japanese government is considering pulling its 600 troops out of Iraq in the first half of next year, the national daily Yomiuri Shimbun said, while the government denied it had such a plan.
Japan's ruling Liberal Democratic Party has already approved an extension of the troops' current mandate, which expires on December 14.
Japan's dispatch of military personnel, first approved in 2003, helped cement close ties between Prime Minister Junichiro Koizumi and U.S. President George W. Bush, though the troops' activities are limited to humanitarian and reconstruction activities under Japan's pacifist constitution.
Japan's deputy chief cabinet secretary denied the report and Koizumi said no decision had been made.
Earlier, Deputy Chief Cabinet Secretary Seiken Sugiura told a news conference: "The government is aware of the report. But there is no truth to the statement that it is considering such a plan."
But the main factor in deciding Japan's withdrawal strategy may be decisions made by Britain and Australia, whose troops provide security for the Japanese in southern Iraq.
Japanese officials have said it would be difficult for its troops to maintain security around their base in the southern Iraqi town of Samawa without back-up, the paper said.
The Yomiuri report said both Britain and Australia have told Tokyo they plan to withdraw from Iraq next year.
British Prime Minister Tony Blair has dismissed mounting calls to set a timetable for withdrawal of British forces, saying they will remain until local forces can maintain security.
The top U.S. general in Iraq on Wednesday cast doubt on his previous forecasts of a substantial cut in American forces in 2006, saying Iraq was in a period of heightened uncertainty, Reuters reports.
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