Thousands of Iraqi troops withdrew Saturday from occupied Iranian territory, and Baghdad said those forces would be redeployed in the escalating confrontation with the United States.

Iran sent home 1,000 Iraqi prisoners of war as a sign of its confidence that Baghdad's repatration of POWs, which began Friday, will continue.The troop withdrawal and prisoner exchange followed an offer by Iraqi President Saddam Hussein on Wednesday to bring a formal end to the 1980-1988 Iran-Iraq war. A cease-fire halted the fighting two years ago.

Iraqi troops, flying white flags, began pulling out of Iranian border areas Friday night. Iraqi forces had already pulled out of more than half the occupied areas in the southern Shalamcheh and Kushk regions, Iran's Islamic republic News Agency said Saturday.

Saddam has said the pullout will take five days.

Iran says Iraq occupies more than 773 square miles of its territories. But the United Nations says the size of the occupied area is half of that.

The Iraqi army daily newspaper al-Qaddasiyah declared in an editorial Saturday that the 30 divisions which have been facing Iran would now be used to bolster Iraqi formations in the south.

That was the first official Iraqi word that Baghdad will redeploy forces freed from the Iranian border in Kuwait, occupied by Iraq on Aug. 2.

The forces "which are leaving Iran's borders . . . and the high readiness of our air force will be an additional might to what we had already prepared against the aggressive forces," the daily said.

It was not known how many of the 30 Iraqi divisions - more than 200,000 troops - would be moved to Kuwait. The Iraqis have about 10 divisions in the occupied emirate and have more than 120,000 troops massed on the border with Saudi Arabia.

Iranian newspapers ran huge headlines Saturday welcoming the prisoners, some of whom were captured soon after the outbreak of war in September 1980.

The Farsi-languge Jomhuri Eslami called their return "a major victory for Iran."

The site of the prisoner exchanges, Qasr-e-Shirin, a sleepy, dusty town inside the Iranian border, was decked with flowers, flags, and colored ribbons.

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At Tehran's Mehrabad airport, a 10-year-old girl named Nahid waited anxiously for the arrival of her father. She knew him only from a framed photograph on the mantel and from her mother's stories.

In a message to the International Committee of the Red Cross, Iranian Red Crescent head Vaheed Dastjerdi urged that the prisoner repatriation be boosted to 5,000 a day "with regard to the sensitive and dangerous conditions in the Persian Gulf."

The Red Crescent said it could handle that many. But the International Committee of the Red Cross has said that for now, it can only handle daily 1,000 mandatory interviews to make sure the prisoners want to go home. It said it hoped to increase that number.

The Red Cross has registered about 19,000 Iranian POWs in Iraq and about 50,000 Iraqis in Iran. But the United Nations estimates that both sides actually hold more than 100,000.

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