The government has set out a two-year plan to scale down the Army's presence in Northern Ireland and change the way the province is policed.
The Army has started dismantling watchtowers (Army picture)
Northern Ireland Secretary Peter Hain made the announcement after the IRA said it was ending its armed campaign.
The number of troops will be reduced from 10,500 to about 5,000 if the security climate is right.
The government is also aiming to repeal within two years counter terrorist legislation particular to NI.
Army posts will also be closed and police stations defortified.
Sinn Fein's Conor Murphy met with Mr Hain and Chief Constable Hugh Orde on Monday ahead of the announcement.
The major security response to Thursday's IRA statement will mean significant changes to the security landscape in south Armagh, Belfast and Londonderry.
The controversial Divis Watchtower, on top of a block of flats in west Belfast, is among those set to be removed.
Mr Hain said the moves would only happen in the right security situation.
"My first and overriding priority, and that of the chief constable and the
Army GOC, is the safety and security of the people of Northern Ireland," Mr Hain said.
"We will not do anything that will compromise that.
"Provided the enabling environment is established and maintained this
programme will be achievable within two years though if the conditions are right to move more quickly in implementing elements of the plan, the government will do so.
"The programme published today will see the creation of an environment which will allow the return of conventional policing across Northern Ireland."
Earleir on Monday, Sinn Fein welcomed the start of the operation to scale down security across Northern Ireland.
Speaking on Monday, Sinn Fein chief negotiator Martin McGuinness said: "I think we'll have a fair idea by Christmas how things are shaping up.
Peter Hain said police and Army chiefs would dictate pace of change
"I think until then we will see the spotlight turning on the Democratic Unionist Party, who really do need to respond to this by adding their own momentum."
On Friday, the Army began the first steps of dismantling security bases in south Armagh after the IRA's statement saying it had ended its armed campaign.
It was announced that a base at Forkhill will close, while a watchtower at Sugarloaf Mountain and an observation post at Newtownhamilton police station will also be removed.
Unionists reacted angrily to the news of the Army posts being dismantled.
The British and Irish governments are considering the next steps to restore power-sharing in Northern Ireland.
The British government also intends to introduce legislation in the autumn to allow paramilitary fugitives to return home.
In a statement released on Thursday, the IRA said it would pursue exclusively peaceful means.
Political talks last year failed to restore devolution, which stalled amid claims of IRA intelligence gathering at Parliament Buildings, Stormont, in 2002.