A US general will be in charge of all military forces in Iraq even after the end of the occupation, a senior British official said on Wednesday.
Efforts are focussed on establishing the interim government
American and British forces will remain in Iraq "for at least two years", the official said.
Backed by the interim-government they will be part of a multinational force, for which a UN Security Council mandate will be sought in May.
Power is due to be handed to Iraq's interim government on 30 June.
However the members of the new government are likely to have been selected by the end of April, in time for a new UN Security Council resolution approving the plan, the official said.
The multinational security force will have a unified military command and will incorporate the new Iraqi army and the Iraqi civil defence force. The Iraqi police force is not expected to be part of the structure.
In overall command will be a four-star American general, and under him a three-star American general will be in charge of operations. There will also be a British deputy to the senior officer.
BBC News Online's world affairs correspondent Paul Reynolds says that despite ongoing security problems in Iraq the British authorities continue to be relatively optimistic about the eventual outcome there.
An agreement on the new security structure is currently being worked out between the Iraqi Governing Council and the occupying powers following Monday's agreement on the interim constitution, known as the Transitional Administrative Law (TAL).
The British representative to the Coalition Provisional Authority Sir Jeremy Greenstock has described the agreement on the TAL as a "significant milestone".
"It is significant that the TAL contains dates and that compromises were made by all sides," he told reporters on a visit to London to brief British government ministers.
Priority is now being given to the selection of the interim government itself.
The new government will be run by an Iraqi prime minister, probably under a revolving three-person presidency, and current ministers are expected to stay on in their posts. However, the governing council itself will be wound up.
Outlining the plan to reporters at the UK Foreign Office, the official accepted that the structure would be "less democratic" than the original proposal of selecting a government by a series of meetings around the country. There will instead simply be "consultations" this time.
The caucus system was abandoned after objections from the majority Shia population.
The interim government will be in charge until elections for a transitional national assembly. The assembly will draw up a permanent constitution upon whose basis elections to a full Iraqi government will be held by the end of 2005.