British and American troops are working alongside Iraqi forces
John Hutton has said "significant announcements" about troop numbers in Iraq would be made in the near future.
The defence secretary was asked in the Commons whether troop reductions in Iraq could be speeded up, to free up more personnel for Afghanistan.
He told MPs he was "optimistic" they would make a "very significant change" to the mission in Iraq in early 2009.
But he said the two countries wanted an "enduring defence relationship" and Britain would continue to support Iraq.
Mr Hutton has previously said the process of reducing UK troop numbers from the current 4,100 could begin early next year.
Mr Hutton, who visited Iraq in October and met Iraq's PM Nouri al-Maliki, told MPs: "The prime minister of Iraq made it very clear to me how much he welcomed the role of UK forces in the south of Iraq and wanted to see that role be completed in the near future. It will be."
But he said even with the expected "very significant change in our mission in Iraq" it would be "quite wrong to assume from that that UK forces will have no further role to play in supporting our Iraqi allies - they certainly will".
He said both he and his Iraqi counterpart wanted an "enduring defence relationship" between the two countries.
"I think the two areas particularly where we can make a significant enduring contribution firstly will be in supporting the training of the Iraqi officer corps ... and secondly .... we want to continue to mentor and support the Iraqi navy."
Mr Hutton said the speed at which forces in Iraq were reduced depended on "conditions on the ground" and advice from military commanders.
"I said... last week we remain optimistic that we will be able to make a very significant change in our mission in Iraq in the early part of next year.
"I can't be more specific than that for obvious reasons, I don't want to say or do anything that would compromise the safety of our forces on the ground there, but I think my honourable friend can look forward ... to very significant announcements in the near future."
Britain is currently trying to secure an agreement with Iraq to allow its troops to remain after the UN mandate on the military presence runs out at the end of the year.
But a long-term security pact between Iraq and the US, on which the British want to base their own bilateral deal, faltered after Iraq's ruling coalition said it wanted to make changes to the draft outline.
Last week, US President George Bush said he was confident a deal to secure the future of US troops would be approved.