Germany has decided to extend its troop presence in Kosovo by a year for the Nato-led Kosovo Force (KFOR) mission, but will reduce the number of soldiers in the region by 1,000.
Government spokesman Christoph Steegmans said that the positive development of the situation on the ground and the build-up of independent security structures meant that the country was able to reduce its upper limit to 2,500.
"The mission will be extended until at least May 2011," he said.
Germany is currently the largest supplier of Nato troops in the region, with 1,500 soldiers deployed on the ground.
KFOR entered Kosovo in 1999 as part of the international efforts to build peace and stability in the region, when 10,000 troops were deployed to the area by 31 countries.