(Adds details)

BAGHDAD, July 19 (Reuters) - British Prime Minister Gordon Brown made an unannounced visit to Iraq on Saturday, seeking to build on the improved security situation in the country to promote investment.

Iraqi officials said Brown was holding talks with Prime Minister Nuri al-Maliki in Baghdad.

Brown is expected to hail a reduction in violence in Iraq, particularly in the southern province of Basra, which was under the control of British troops until they handed over to Iraqi forces last December.

A spokesman for Brown said this week that the prime minister wanted to focus on the "economic element" during the trip and encourage investment in oil rich Basra, the transit point for most of Iraq's crude exports.

He said he did not expect Brown to make any announcement on the level of British troops in the country, which remains at around 4,000 after plans to reduce them further were delayed.

Brown's government, whose opinion poll ratings have slumped, is expected to make a statement to parliament next Tuesday on Britain's future role in Iraq.

British Defence Minister Des Browne, who visited Basra city in May, said it was a "transformed city" since Maliki launched a crackdown against Shi'ite militias in late March.

Brown and Iraqi Deputy Prime Minister Barham Salih launched the Basra Development Commission last December to encourage investment in Basra province.

The British leader is the latest high-profile official to visit Iraq since violence dropped sharply. Turkish Prime Minister Tayyip Erdogan travelled to Baghdad earlier this month and urged the region to help Iraq rebuild after years of war.

Analysts credit an increase in American troop levels and a more assertive stance by Iraq's security forces for reducing violence in Iraq to four-year lows.

Maliki in recent months has sent his forces into Shi'ite militia strongholds in Baghdad and southern Iraq and launched a crackdown on Sunni Arab al Qaeda militants in the north.

Britain sent 45,000 troops to take part in the 2003 U.S.-led invasion to topple Saddam Hussein, but only some 4,000 remain at an airport near Basra city where they are training Iraqi forces.

Britain announced last October it planned to cut troop numbers to 2,500 from around April this year, cutting back its involvement in a war that is unpopular with many Britons.

But the government delayed the move after Shi'ite militias fiercely resisted the Iraqi military's crackdown in Basra in late March.

Britain's army chief, Jock Stirrup, indicated on Friday that major troop cuts in Iraq, where 176 British soldiers have been killed since 2003, would have to wait until next year.

The unpopularity of the Iraq war was a factor in Brown's predecessor, Tony Blair, stepping down early in June last year.

Iraq has faded as an election issue in Britain, but Brown's opinion poll ratings have continued to slump, depressed by faltering growth, rising inflation and sliding house prices.

(Editing by Dean Yates)

AlertNet news is provided by