U.S. President Barack Obama has told east European states he is backing away from plans for an anti-missile shield there, in a move that may ease Russian-U.S. ties but fuel fears of resurgent Kremlin influence.
Russia said it would welcome abandonment of the plans, which have been a major source of Russian-U.S. tensions.
Poland said Obama would announce a final decision later on Thursday (1400 GMT) on a project that has raised the prospect of multi-billion dollar contracts for U.S. defense giants.
The shield, involving interceptor missiles in Poland and a radar complex in the Czech republic, was promoted by Obama's predecessor George W. Bush to defend against any missile launches from "rogue" states such as Iran and North Korea.
"Today, shortly after midnight, Barack Obama telephoned me to announce that his government is backing away from the intention of building a missile defense radar on Czech territory," Czech Prime Minister Jan Fischer told reporters.
"The Czech Republic acknowledges the decision."
A senior Polish source close to the negotiations told Reuters Warsaw had received a similar message. "We will not have the interceptors for now."
A U.S. defense official said Washington was now examining an alternative to the "large, fixed system" of the shield. This would target short- and medium-range missiles rather than the long-range rockets seen until now as the threat.
He gave no details.
The Wall Street Journal newspaper said Washington had decided Iran was not as advanced in developing long range missiles as it had previously thought.
The Obama administration seeks to "reset" battered ties with Russia so that the two former Cold War foes can cooperate on Iran, on fighting Taliban insurgents in Afghanistan and on reducing their vast arsenals of nuclear weapons.
Russia is allowing the United States to move trains carrying supplies for U.S. forces across the country via Central Asia to Afghanistan, avoiding routes through Pakistan that had come under frequent attack from the Taliban.
Washington also wants Russian support in economic sanctions against Tehran, which it accuses of developing nuclear weapons.
Diplomats in Moscow say Russian hardliners could read the shield backdown as a sign of U.S. weakness. Far from doing the bidding of the United States, they may instead press for further gains to shore up Russian power in the former Soviet bloc.
Eastern European states, especially Poland and the Baltic states, saw the missile plan as a symbol of U.S. commitment to the defense of the region against any encroachment by former Soviet masters 20 years after the collapse of communist rule.
