The announcement comes amid inflamed tensions as US forces have repeatedly struck Iran-backed groups in Iraq and Syria in response to dozens of attacks on bases hosting US and coalition troops in both countries.

The attacks have been fuelled by the war in Gaza between Washington ally Israel and the Iran-backed Palestinian Islamist movement Hamas.

The two countries agreed to form working groups that would eventually lead to formulating "a specific and clear timeline... and to begin the gradual reduction of its (the coalition's) advisers on Iraqi soil", Iraq's foreign ministry said.

The ministry said the timeline would be contingent on evaluating the "threat posed by IS and its danger" as well as the "reinforcement of the capacities of the Iraqi security forces".

In a statement, US Secretary of Defense Lloyd Austin confirmed meetings "in the coming days" to discuss the "transition" of the coalition based on the outcomes of the Joint Security Cooperation Dialogue held between the two countries in August.

The meetings would "determine how the Coalition's military mission will evolve on a timeline" based on factors including the threat posed by IS, "operational and environmental requirements," and the capability levels of Iraq's security forces, the statement said.

There are roughly 2,500 US troops deployed in Iraq and about 900 in Syria as part of the anti-IS coalition launched in 2014.

A senior US defence official said the upcoming meetings would not negotiate the withdrawal of American forces from Iraq but acknowledged "a need to transition to a normal bilateral security cooperation relationship".

- Attacks 'need to stop' -

The US strikes on Iran-backed groups sparked condemnation from Baghdad, with Prime Minister Mohamed Shia al-Sudani calling on the coalition to leave the country.

Hundreds of people waving the flags of pro-Iran groups attended on Thursday the Baghdad funeral of one fighter killed in the latest US strikes on Wednesday.

On a visit to Iraq, Spanish Foreign Minister Jose Manuel Albares on Thursday said the spate of attacks targeting US-led troops in Iraq "need to stop".

"We are extremely worried by the constant attacks against international military bases," said Albares, whose country has more than 300 troops deployed to Iraq.

"We are here at the request of the government of Iraq and we will leave when the government of Iraq considers," Albares added, noting that he seeks to "avoid a spillover effect of the crisis in Gaza".

While receiving Spain's top diplomat, Sudani said IS "is no longer a danger for the Iraqi state, and our armed forces are capable of fully assuming the maintenance of security and stability".

A senior US military official on Thursday estimated IS numbers at around 1,000 in Iraq and Syria, including a network of "facilitators, fighters and financiers" supporting the group.

Sudani added that he hopes to form "bilateral relations with all member countries" of the international coalition.

Many of the attacks on coalition troops have been claimed by the Islamic Resistance in Iraq, a loose alliance of Iran-linked groups that oppose US support for Israel in the Gaza conflict.