WASHINGTON - President Barack Obama on Thursday abandoned plans for a large missile defense shield in eastern Europe, promising instead a stronger, swifter defense system to protect U.S. allies against any threat from Iran.

In a brief announcement, Obama said he was dropping a plan to base interceptor missiles in Poland and build a radar system in the Czech Republic -- a move that could ease tensions with Russia but fan regional fears of resurgent Kremlin influence.

The best way to responsibly advance our security and the security of our allies is to deploy a missile defense system that best responds to the threats that we face and that utilizes technology that is both proven and cost effective, Obama said.

Moscow said it would welcome a decision to scrap the plans, which had complicated U.S. efforts to enlist Russian support over Afghanistan, Iran and nuclear arms control.

But critics quickly accused the White House of going soft on defense by dropping the project, which had raised hopes of huge contracts among U.S. defense giants.

Senator John McCain, the former Republican presidential candidate, blasted the move as seriously misguided.

The Bush administration had proposed the system amid concerns Iran was trying to develop nuclear warheads it could mount on long-range missiles.

THREAT REASSESSMENT

The shield was intended to defend against any long-range missile launches from rogue states such as Iran and North Korea. Russia saw it as a threat to its missile defenses and its overall security.

Eastern European states, especially Poland and the Baltic states, saw the missile plan as a symbol of U.S. commitment to the defense of the region against any encroachment by its former Soviet rulers 20 years after the end of communist rule.

Obama informed the Czech and Polish governments of his decision just hours before the announcement, officials said.

Pentagon officials said the decision to move away from the shield was based on intelligence indicating Iran is focused on developing short- and medium-range missiles rather than the long-range intercontinental missiles originally feared.

Multibillion dollar contracts are at stake in the future of U.S. missile defense plans.

Boeing Co, the Pentagon's No.2 contractor, last month unveiled a proposal to build a mobile interceptor missile in a bid to blunt Russian fears of U.S. fixed sites in Europe. Boeing was also eyeing a 47,500-pound interceptor that could be flown to NATO bases as needed

(Additional reporting by Jana Mlcochova and Jan Lopatka in Prague, Gabriela Baczynska in Warsaw, Conor Sweeney in Moscow, Adam Entous and Steve Holland in Washington and Ross Colvin in Baghdad, Jim Wolf, Tim Hepher; Writing by Andrew Quinn, Editing by Jackie Frank)

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