The US has plans to establish an American-led military administration in Iraq, similar to the postwar occupation of Germany and Japan, which could last for several years after the fall of Saddam Hussein, it emerged yesterday.

The plans, which surfaced after President George Bush won a resounding congressional mandate to use force in Iraq, envisage the biggest “nation-building” effort the US has undertaken since the end of the second world war.

The occupation of the country would need an estimated 75,000 troops, at an annual cost of up to $16bn (£10bn), and would almost certainly include British and other allied soldiers. It would be run by a senior American officer, perhaps General Tommy Franks, who would lead the assault on Iraq, and whose role would be modelled on that of General Douglas MacArthur in postwar Japan.

The occupation regime would track down war criminals and remove members of President Saddam’s Ba’ath party from power, comb the country for any hidden biological and chemical weapons, and guarantee Iraq’s territorial integrity. It would also administer the country’s huge oil deposits.

Ahmad Chalabi, leader of the opposition Iraqi National Congress who is visiting Washington this week, gave the plan a qualified welcome yesterday. He said he would prefer an interim Iraqi government to be established in the immediate aftermath of President Saddam’s fall, but would accept a foreign administration as a temporary precursor to a true democracy.

“We are concerned first with the liberation of Iraq,” he told the Guardian, adding that he had “no idea” how long such a transitional period would last. He said it was “very, very clear it is going to be a huge development in the Arab world”.

Mr Chalabi denied that such a large-scale prolonged US military presence would destabilise the region, but an Arab diplomat in Washington said it could have an “explosive” impact in the Middle East, where the US military presence has already proven a rallying cry for militants including Osama bin Laden.

“Every day in Iraq would raise the cost,” the diplomat warned.

The Iraqi project, outlined by Mr Bush’s senior adviser on the Middle East, Zalmay Khalilzad, would involve running the entire country until a democratic Iraqi government was deemed ready.

A British official stressed yesterday that although contingency plans were undoubtedly being drawn up, London had not agreed to such a strategy. “It seems this is coming from the right end of the [political] spectrum. I don’t know if this is mainstream thinking in the administration,” the official said.

US officials said no final decision had been taken on the plan, but indicated that some form of direct American military rule was almost inevitable.

“The purpose of the military has not changed: to fight and win wars,” Ari Fleischer, the White House spokesman said. “But at the end of the day, when the military conflict has come to an end, the question then becomes – in the post-Saddam era – how to make certain the country remains unified, is stabilised, the region has stability. The United States will not cut and run from that mission.”

Mr Khalilzad provided a sketch of the plan at a meeting of diplomats and Middle East experts at the weekend. “We will not enter Iraq as conquerors. We will not treat the Iraqi people as a defeated nation,” he insisted. He said the long-term US aim was to establish a “representative and democratic” government.

“In the short term, however, we will reunify Iraq, because at present Iraq is not united, and maintain its territorial integrity,” he said.

“First, there will be the political reconstruction. This will involve thorough reform of the government, de-Ba’athising Iraq, removing elements used by Saddam to enforce his tyranny. Officials guilty of crimes against humanity will be prosecuted.”

He conceded that “the costs will be significant”, but added: “We would have the commitment of resources necessary, and we would have the will to stay for as long as necessary to do the job.”

A military think-tank called the Role of American Military Power, has estimated that 75,000 troops would be necessary to stabilize Iraq after any war. It is possible that funds would be stripped from US contributions to international efforts to stabilize other regions such as the Balkans, to help meet the costs.