British troops handed control of Basra to the Iraqis on Sunday
Around 350 British soldiers have been told they will leave southern Iraq four months early.
The Royal Dragoon Guards Battle Group will return to their barracks in Germany in late January.
The Battle Group began its tour of duty, which had been expected to last six months, in Basra in November.
The reduction is part of the British military's plans to reduce troop numbers following the handover of the province to Iraqi control.
The return of the Battle Group, which is made up of the Royal Dragoon Guards Headquarters and C Company, plus Burma Company from the 1st Battalion the Lancashire Regiment, will leave around 4,150 British troops in Iraq.
On 16 December British troops transferred control of Basra province to the Iraqi authorities in the first stage of the handover.
The British troops still in Iraq will take a backseat role, focusing on training Iraqi forces.
Numbers will drop to around 2,500 from the spring, with a further decision about the next phase made then.