Concern over plan for cutting troops in Iraq.
Mr Reid has insisted the document is just one of a number covering various scenarios. And he highlighted the Government's pledge to stay in Iraq 'as long as is needed'.
But the Conservatives raised concerns over the revelation. Shadow defence secretary Michael Ancram said the Government had claimed setting a date for withdrawal could endanger troops on the ground in Iraq.
He demanded urgent answers from Mr Reid.
The document - entitled Options for future UK force posture in Iraq - marked 'Secret - UK eyes only', was leaked to The Mail on Sunday.
In it Mr Reid says Britain will need to reach decisions later this year on troop levels in Iraq next year.
He says Britain wants to hand over to Iraqi control the Al Muthanna and Maysan provinces in October 2005 and the other two UK-controlled provinces next April.
'This should lead to a reduction in the total level of UK commitment in Iraq to around 3,000 personnel, ie small scale... and an estimated halving in costs of around pounds 1bn per annum currently,' the document says.
'Though it is not clear exactly when this reduction might manifest itself it would not be before around the end of 2006.'
Mr Reid said there was a 'strong US military desire' for 'significant' force reduction.
According to the document, the US wants to hand over control to Iraqi forces in 14 out of 18 provinces by early next year allowing a reduction from 176,000 troops to 66,000.
But it says Americans are divided over the plans. It says the Pentagon wants a 'relatively bold reduction' while US commanders in Iraq want a more cautious approach.
The document also indicates other countries could pull their troops out if Britain and the US went ahead with the plan. It says the Japanese would be reluctant to stay if force protection was provided solely by the Iraqis. The Australian position may also be 'uncertain'.
In a statement, Mr Reid said, 'We have made it absolutely plain that we will stay in Iraq for as long as is needed.
'No decisions on the future force posture of UK forces have been taken. But we have always said that it is our intention to hand over the lead in fighting terrorists to Iraqi Security Forces as their capability increases. We therefore continually produce papers outlining possible options and contingencies. This is but one of a number of such papers produced over recent months covering various scenarios.
'This is prudent planning. I stress again that no decisions on the future force posture of UK forces have been taken.'
Mr Ancram said, 'Given that the Government has previously and firmly indicated that setting a date for possible withdrawal or drawing down could endanger our troops on the ground in Iraq, and given that this allegedly leaked memo speculates on possible dates for such action, the Government should urgently clarify the situation to ensure that it is understood that our troops will remain in Iraq until our tasks there are completed.'