Afghan forces are to take control of security in Lashkar Gah in July in a major step towards the withdrawal of British troops from the country.
The city - capital of Helmand province, where most UK forces have been based - was one of seven areas earmarked for transition by Afghan president Hamid Karzai.
His announcement heralds the first handover from Nato-led to Afghan-led security which will pave the way for the withdrawal of foreign troops by the end of 2014.
Prime Minister David Cameron has repeatedly stressed his commitment to having all British troops out of combat roles in Afghanistan by 2015.
But the transition in Lashkar Gah, where there remains tough Taliban resistance, will be a significant test for the Afghan forces.
As well as in Lashkar Gah in southern Afghanistan, local forces will take charge of security in July in Herat in the west, Mazer-e-Sharif in the north and Mehterlam in the east.
The shift from Nato-led to Afghan-led security will gradually spread out from each of the provincial capitals, Mr Karzai said.
In addition, all of the largely peaceful Bamiyan and Panshir provinces will be transferred, along with Kabul province, except for its restive Surobi district.
Speaking at the National Military Academy of Afghanistan in Kabul, Mr Karzai said: "The Afghan nation doesn't want the defence of this country to be in the hands of others any more."
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In a joint statement, Foreign Secretary William Hague and Defence Secretary Liam Fox said: "This begins the process of a gradual transition, which will be completed across the country by the end of 2014."
