LONDON, Oct 8 (Reuters) - Britain will reduce its force in Iraq -- now numbering more than 5,000 -- to 2,500 troops from spring next year, Prime Minister Gordon Brown said on Monday.

Brown also promised a resettlement package for some Iraqis who had worked with British forces for more than a year to move within Iraq or apply to come to Britain.

In a key address to parliament on policy in Iraq, Brown said British forces in southern Iraq would be moving from a fighting role to an "overwatch" role.

Responsibility for security in the southern Basra province would be handed to Iraqis over the next two months and then a new phase requiring a smaller British role would begin next year, he said.

"We plan, from next spring, to reduce force numbers in southern Iraq to a figure of 2,500," Brown said.

"Existing staff who have been employed by us for more than twelve months and have completed their work will be able to apply for a package of financial payments to aid resettlement in Iraq or elsewhere in the region, or in agreed circumstances for admission to the UK," he said.

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