Nearly half of all British troops currently in Afghanistan will be withdrawn by the end of 2013's "fighting season", ministers have confirmed.
The defence secretary told the Commons a progressive move to brigade-level monitoring would see the total number of UK forces in Afghanistan cut from 9,000 at the end of this year to just 5,200 by the end of 2013.
Details of the drawdown are yet to be confirmed, but are in line with the Nato strategy agreed in Lisbon in 2010.
"This reduction is possible because of the afghan national security forces in assuming a leading role," Hammond told MPs.
Britain will continue to maintain a small number of troops in Afghanistan on non-combat duties after 2014, the prime minister told MPs. Britain will continue to spend £70 million a year on the Afghan national security forces and £170 million a year on aid.
“There remain huge challenges ahead for the Afghan people," Hammond added.
"Our combat mission is drawing to a close, but our commitment to the Afghan people is long term.”
The announcement confirms the biggest reduction in the number of UK forces in Afghanistan since the Taliban were first ousted from Kabul in 2001.
The move will be welcomed with relief by voters in Britain, but military leaders on the ground could express alarm the exit is taking place so rapidly.
Cameron and US president Barack Obama discussed their proposals in an hour-long phone call yesterday, Downing Street said last night.
"On Afghanistan, they discussed progress on the plan to hand security responsibility from the International Security Assistance Force (Isaf) to the Afghan National Security Forces, and agreed that the Nato strategy to withdraw combat troops from Afghanistan by the end of 2014 was on track," a spokesperson said.
"This would present further opportunities for Isaf countries to bring troops home next year and they agreed to stay in close touch as detailed plans develop."
Britain, the US and other countries have poured intense diplomatic efforts into attempts to improve the Afghanistan government's relations with its neighbours, particularly Pakistan.
Cameron told MPs in prime minister's questions: "What we're most focused on is bringing Afghanistan and Pakistan together."
This lunchtime's announcement follows a visit by US defence secretary Leon Panetta to Afghanistan last week. The US could leave as many as 10,000 troops in the country after 2014, when Obama had pledged to achieve a complete withdrawal.