The move, given greater urgency by the killing of Osama bin Laden, had been initially resisted by defence chiefs. Cameron made the announcement to MPs on Tuesday in advance of President Obama's state visit to the UK next week.
Speaking to the liaison committee of MPs, Cameron also pledged to bring in a legally binding target for spending on overseas aid, despite objections by the defence secretary, Liam Fox.
He said legislation would be tabled in the current parliament to increase aid to 0.7% of gross national income by 2013, adding that it was in the UK's interest to honour the commitment made in the coalition agreement with the Liberal Democrats. "I profoundly think it is the right thing to do because we have duty to the poorest in our world even at times of hardship at home," he said.
Cameron denied reports that Obama or the Pentagon was unhappy about the withdrawal announcement, saying overall UK troop levels in Afghanistan would remain at 9,500, after a recent temporary increase.
Cameron said: "I am sure the Americans completely understand that it is rather less than the reductions they are planning and we remain in one of the toughest parts of the country doing one of the most difficult jobs. We are the second biggest contributor, after the United States."
The troops due to be withdrawn will come from those covering Kandahar airport and some based at headquarters.
Cameron urged the Americans not to walk away from Pakistan in response to the discovery that Bin Laden had been living in a garrison city that houses the country's officer training academy. He said: "It is absolutely in our interests to back the democratic politicians of Pakistan in their fight against terrorism. To do that we need to understand the pressures they are under and all the questions they are being asked in their country, but they need to understand the pressure we are under with everybody saying, 'How could they not have known?'"
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