By Ross Colvin

BAGHDAD, Oct 24 (Reuters) - U.S. forces hope to hand over half of Baghdad to Iraqi security control by the end of 2008, after violence in Iraq dropped to its lowest level since January 2006, the No. 2 U.S. general in Iraq said on Wednesday.

"We are anxious for them to take over full responsibility as they are anxious to take full responsibility," Lieutenant-General Raymond Odierno, in charge of U.S. forces' day-to-day operations in Iraq, told a Baghdad news conference.

"You will see steady progress over the next 12 months of us turning large portions of Baghdad (over) to Iraqi security forces as we continue to have success. I think it will be somewhere between 40 and 50 percent by the end of the year."

His comments are significant because stabilising the capital, torn apart by sectarian violence, was the main goal of a 30,000-U.S. troop build-up that began in February, part of a plan to give feuding political leaders time to reconcile.

The comments are likely to be seized on by opponents of the war in the United States, who want Iraq's security forces to assume more responsibility so that U.S. troops can begin pulling out. Handing over security responsibility for the nation's capital would be a major step in that direction.

Supporters of President George W. Bush's "surge" strategy will see Odierno's comments as evidence the plan is working. Bush has asked Americans to be patient and give the strategy time to bear fruit.

Even after handing over control, many U.S. troops, who now number about 170,000, would almost certainly remain in an "overwatch" role to support Iraqi forces.

ROADSIDE BOMBINGS DECLINE

U.S. generals say the Iraqi army, rebuilt from scratch since Saddam Hussein's ouster in 2003, is growing in strength, but critics say it is poorly armed and equipped, while sectarianism and corruption is still rife in the police force.

Seven of Iraq's 18 provinces have already been transferred to Iraqi security control, although these are in Iraq's more stable Kurdish north and Shi'ite south.

"Attack levels continue their steady downward trend that began in June and are now at the lowest level since January 2006," Odierno said, adding that roadside bombings in particular were down more than 60 percent in the last four months.

In February 2006, the bombing of a revered Shi'ite shrine in the town of Samarra unleashed a wave of violence between majority Shi'ite and minority Sunni Arabs that killed tens of thousands, displaced millions and pushed Iraq toward civil war.

While the U.S. troop buildup has helped to reduce violence, there are fears over growing tensions between rival Shi'ite factions in Iraq's south who are vying for political supremacy.

Bombings and shootings are still a daily threat in parts of Iraq as U.S. and Iraqi forces target Sunni Islamist al Qaeda militants and splinter groups from Shi'ite cleric Moqtada al-Sadr's Mehdi Army militia.

Odierno named six Mehdi Army commanders who he said had failed to obey Sadr's order for a six-month ceasefire so that he could reorganise the force, which is increasingly seen as beyond his control.

U.S. forces have staged a number of raids in Sadr City, the Baghdad slum that is the Mehdi Army's main stronghold, in recent weeks to capture members of rogue factions blamed for continued kidnappings, extortion and murders.

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