Abadi to dissolve 30 per cent of militia group
The unprecedented move, described as the beginning of the end for the government funded group, was made at a meeting between the PM and military leaders.
"The decision was made due to the financial crisis plaguing the country," a local source said.
The Popular Mobilisation Forces is an umbrella organisation linking 53 factions that receive financial support from Baghdad as well as military aid from Tehran to combat the Islamic State group.
"It has not yet been implemented, however it will be applied to all factions of the group without selectivity or discrimination," the source added.
Political expert, Mohammad al-Qaissi suggested the President was under a lot of pressure from the financial crisis as well as recent controversies surrounding the Popular Mobilisation Force that allegedly "pose a threat to the government".
An Iraqi MP previously revealed meetings between the President and US officials, including the US ambassador to Iraq, in which solutions were sought to deal with the Popular Mobilisation Forces.
The US allegedly supported al-Abadi's intentions to dismantle the group "internally and without any complications" while suggesting banning the militia from joining liberation operations in al-Anbar and Mosul.
The news comes after the Prime Minister admitted to crimes and violations committed by the Popular Mobilisation Forces at this year's annual security conference in Munich.