Barack Obama: "I'm confident... we have strengthened America's national security"
US President Barack Obama has shelved plans for controversial bases in Poland and the Czech Republic in a major overhaul of missile defence in Europe.
The bases are to be scrapped after a review of the threat from Iran.
Mr Obama said there would be a "proven, cost-effective" system using land- and sea-based interceptors against Iran's short- and medium-range missile threat.
Russian President Dmitry Medvedev has welcomed the US decision, calling it a "responsible move".
Russia had always seen the shield as a threat.
However, there has been criticism of the decision in conservative circles in the US.
The US signed a deal in August 2008 with Poland to site 10 interceptors at a base near the Baltic Sea, and with the Czech Republic to build a radar station on its territory.
Kevin Connolly, BBC News, Washington
It would be hard to invent a news story that tied together more strategic and political issues than the Obama administration's decision to change its stance on the deployment of a missile defence shield in Eastern Europe.
It touches on Washington's assessment of Iran's military capabilities. There is an underlying assumption that Tehran's capacity for mounting warheads on long-range missiles does not pose an immediate strategic headache.
It also sends a signal to the peoples of Central Europe about how President Barack Obama proposes to manage the post Cold War order in their neck of the woods in the next few years. And it raises questions about the administration's much-talked-about desire to "hit the reset" button on its relationship with Russia.
White House spokesman Robert Gibbs later stressed the overhaul was "not about Russia".
Although the White House said the US "no longer planned to move forward" with the old shield scheme for Poland and the Czech Republic, Defence Secretary Robert Gates stressed the US was not abandoning missile defence of Europe.
He said negotiations were under way with both nations about deploying upgraded SM-3 interceptors from 2015.
The first phase of the new strategy, he said, would be to deploy "current and proven missile defence systems in the next two years", including the sea-based Aegis and the current SM-3.
Iran says its missile development programme is solely for scientific, surveillance or defensive purposes, but there are concerns in the West and among Iran's neighbours that the rockets could be used to carry nuclear weapons.
Mr Medvedev said the US decision was a "positive" one.
He said he would discuss the missile defence issue with President Obama during a visit to the United Nations in New York next week.
Mr Medvedev said in a TV address: "We value the US president's responsible approach towards implementing our agreements. I am ready to continue the dialogue."
The two countries are currently in talks about reducing their nuclear weapons stockpiles, and the US move could influence Russia to be more co-operative, correspondents say.
Mr Medvedev said there were now "good conditions" for talks on missile reduction.
Gates on missile shield overhaul
However, there has already been some criticism in the US.
John Bolton, who was undersecretary of state for arms control and international security under President Bush, said the move was "unambiguously a bad decision".
He said: "This gives away an important defensive mechanism against threats from countries like Iran and other rogue states, not only for the US but for Europe as well.
"It is a concession to the Russians with absolutely nothing in return."
Nato Secretary-General Anders Fogh Rasmussen said the US move was "a positive step", Associated Press reported.
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