Afghanistan president Hamid Karzai has issued a decree which formalises a four-month deadline for private security companies to disband.
With complaints that they are poorly regulated, reckless and effectively operate outside local law, such operators have become a point of contention between the Afghan government and US and Nato coalition forces and the international community.
Private security contractors working in Afghanistan will have to either join the Afghan police force or cease operations by the deadline, according to the decree.
There is an exception for private security firms working inside of compounds used by international groups, including embassies, businesses and non-governmental organisations."They will have to stay inside of the organisation's compound and will have to be registered with the interior ministry," the decree says.
All security outside of these compounds will have to be provided by Afghan security forces, along with all security for supply convoys for international troops, the decree says. Any unlicensed contractor will have their weapons and equipment seized, it says.
The decree is expected to meet resistance from Nato officials, who rely heavily on private security companies to guard convoys and installations across the country. Officials in Washington have questioned whether a four-month deadline is realistic.
Karzai pledged in his inauguration speech in November to shutter both foreign and domestic security contractors by November 2011. This decree significantly speeds up the timeline.
The Afghan government has estimated that 30,000 to 40,000 people work for security companies in Afghanistan.
According to the Pentagon, there are about 26,000 private security contractors working in Afghanistan for 37 different companies - 17 of them Afghan-owned. The State Department and USAID rely the most heavily on the companies to provide their employee security.
Meanwhile, separate bomb attacks in the country on Tuesday killed three US service members and two Afghan civilians.