The Iraqi Ministry of Interior has brought back so many of Saddam Hussein's police officers and recruited so many new ones that a $60 million buyout program is being created to cut their ranks by 25 percent, senior U.S. government officials said.

With bombings and terrorist actions occurring almost daily in Baghdad and other parts of the country, U.S. and Iraqi officials are wrestling with how to shape a new, coordinated security force out of the remnants of Hussein's army and his often corrupt police and intelligence services. But the plans are to cut by 30,000 the 120,000 officers on the government payroll.

Over the past year, a series of police and army organizations has been created by U.S. agencies including the occupation authority, which will expire at the end of this month; the coalition military forces; the State Department; and the CIA.

The security forces include provincial police departments, dignitary protection forces, a police civil intervention force, emergency response unit and highway patrol, according to a senior U.S. official involved in the process.

In addition, there are border police, customs police, riverine police, facility protection security forces and army units recruited and trained for urban counterinsurgency operations. There are also special operations forces and a coastal defense force with a base and five patrol boats. An air force is to be re-established shortly, with small reconnaissance and fixed-wing aircraft as well as helicopters.

Only 30,000 of the police officers on the government payroll have received training, and an additional 2,500 are in courses underway in Iraq, Jordan and elsewhere. By October, it is expected that police training facilities will be able to turn out about 5,000 officers every 10 weeks, the senior official said.

"The roller coaster that is Iraq is ascending, although there clearly are bumps on the tracks on a daily basis," Lt. Gen. David H. Petraeus said. He has taken over the job in Baghdad of supervising the organization, training, equipping, deploying and operational mentoring of the new Iraqi army, police and other elements, in conjunction with the new interim Iraqi ministers of interior and defense.

Petraeus, in testimony before the House Armed Services Committee on Thursday via videoconference from Iraq, disclosed that although the Iraq Police Service was "authorized at about 90,000, they've got 120,000 on the payroll."

"Obviously, we need to trim this," Petraeus told the legislators, "and we're going to in fact do that."

He said Iraqi Prime Minister Ayad Allawi supports the idea of using $60 million in Iraqi oil money to fund the severance payments, which will not be taken from the $3 billion in U.S.-appropriated funds allocated for Iraq security expenditures.

Petraeus, whose organization is called the Office of Security Transition, oversees about 2,000 military and civilian trainers, advisers, assistance teams and staff.

The over-recruiting of police -- and the resulting severance program -- highlights the challenges in Iraq, where frequent terrorism complicates practical economic issues.

Under the new U.S.-supported program, police salaries have been set substantially higher than they were under Hussein's government. At that time, police were notoriously corrupt, in part because of low salaries, which they supplemented by taking bribes from businessmen and blackmailing other people.

Some of those practices have continued. A February report by the International Committee of the Red Cross said that some Iraqi police were arresting Baghdad residents and threatening to turn them over to coalition forces as terrorists if they or their families did not pay them. One senior U.S. official familiar with the police program said last week that corruption, particularly among former Hussein police officers, is still a problem.

As large numbers of former police officers returned to duty, the U.S. and new Iraqi officials embarked on a major program to recruit more officers. With the new salaries, and uncertainty over retirement pay and benefits, "far fewer police have retired than would have been normal," the official said.

The severance-pay program was developed because "no one wants to force police into the ranks of the unemployed without reasonable compensation," the official said. When L. Paul Bremer took over the occupation authority last year and dissolved the army, the suddenly retired officers led violent protests, and many joined the insurgents.

Just which police will be bought out remains to be seen. The new interior ministry is working on the program in conjunction with Petraeus's team. Among the criteria will be age, fitness, and civilian and military education, the official said.

In discussing the police program with House members Thursday, Petraeus noted that "the young recruits are indeed impressive," and that that "underscores . . . the importance of using some of the [Iraqi oil] money that Prime Minister Allawi approved to in fact thank some of the very, very senior police and to offer early retirement schemes for some of them."