United States president Barack Obama is scrapping an anti-missile defence system for Europe, which Russia had opposed.
Instead of the Bush Administration's plan to place missiles and radar bases in Czechoslovakia and Poland, the new plan will see defensive missiles largely based at sea. Defence Secretary Robert Gates says will combine land and sea-based interceptor rockets.
Mr Obama said a reassessment of the risks posed by Iran and developments in technology were the reasons for the change.
Intelligence reports say Iran's missile programme is now focused on short and medium-range missiles.
The US signed a deal with Poland in August last year to site 10 interceptors at a base near the Baltic Sea, and another deal with the Czech Republic to build a radar station on its territory.
Russian reaction
President Dmitry Medvedev of Russia has welcomed the decision as a responsible step.
Russia had objected to the plan to base a missile interceptor system close to its borders, calling it a threat to its security.
The leaders of Poland and the Czech Republic say relations with Washington will not be damaged by the decision.
