WASHINGTON —  A U.S. occupation of Iraq that relies on the creation of two new Army divisions could cost up to an estimated $29 billion annually, according to an analysis by the Congressional Budget Office (search).

Relying on existing soldiers serving one-year tours would cost as little as $8 billion a year but would mean the force would steadily shrink as troops were rotated out of Iraq, the study said.

The report, released Tuesday, was requested by Sen. Robert Byrd (search), D-W.Va., one of Congress' most outspoken critics of Bush administration policy in Iraq. In remarks on the Senate floor, Byrd said the report "is quantified evidence that the long-term occupation is straining our forces close to the breaking point."

The nonpartisan budget office said the Army (search) could not keep a force in Iraq of its current size beyond March 2004 if it retains its current policy of rotating most troops out of the country after a year. The force would have to shrink to no more than 64,000 under that policy -- down from the more than 180,000 U.S. military personnel in Iraq and neighboring countries, the report said.

Creating two new divisions would allow a force of up to 129,000 personnel, CBO said.

The study excluded any cost estimates for rebuilding Iraq, which administration officials have said could cost billions of dollars.