The end of the war has brought a change of policy

The British Government's decision follows talks between Mr Blunkett, UN High Commissioner Ruud Lubbers, French Interior Minister Nicholas Sarkozy and his German counterpart Otto Schilly.

Mr Blunkett said the government would work with the International Organisation for Migration to help those who are eager to return as soon as possible.

"Now that Saddam Hussein's regime has been removed from power, thousands of Iraqis who fled to Europe are seeking ways of returning home to help rebuild their country," he said in a statement after the meeting.

"Iraq needs the skills and commitment of these exiles as it makes the transition to democratic stability and prosperity.

"We have agreed today to work together to facilitate such returns as soon as possible.

"The UNHCR is currently assessing the situation in Iraq. Over the next few weeks we will move to laying the practical groundwork to enable returns to take place."

Turning the corner?

Last month Prime Minister Tony Blair claimed the UK had "turned the corner" in dealing with asylum issue after figures indicated a sharp drop in the numbers of people applying to stay here.

But the Refugee Council said it was early days to be talking about returning exiled Iraqis.

The council's communications director, Fazil Kawani, said: "Iraq is just emerging from a conflict situation and it is premature to be talking about enforced returns.

The way to ensure sustainable returns is through a well-managed voluntary returns programme that allows people to return with dignity and in safety Fazil Kawani Refugee Council

"The situation in Iraq is still volatile and there remain genuine concerns about security, basic infrastructure and lack of overall governance.

"Therefore the priority must be to deal with concerns on security, housing and basic infrastructure like schools and hospitals."

Home Office figures showed a 32% fall in the number of people applying for asylum in Britain in the first three months of this year, down from 23,000 to 16,000.

The number of Iraqis applying for asylum in the UK rose sharply during last year.

Iraqis made up the largest group of asylum seekers for the 15 months up to the end of March.

In that time 17,070 lodged applications for asylum in Britain. The figures for 2002 suggest the number of people applying for asylum from Iraq more than doubled to 14,940, from 6,705 the year before.

Impact of war

This propelled it to become the nationality with the highest number of people seeking asylum in the UK, overtaking Afghanistan, which held the top spot in 2001.

In 2002 asylum was granted to 700 people applying from Iraq and a further 8,130 were given exceptional leave to remain.

The previous year the total allowed to stay in both categories was 2,600.

Even before the upheaval triggered by the US-led invasion of Iraq in April 2003, the country was suffering from the combined effects of two major wars - against Iran in the 1980s and then against US-led forces following the invasion of Kuwait in 1991.

In 1982 there were 4,223 asylum seekers applying in the UK, compared to 110,700 in 2002.