Supporters of a Filipino hostage in Iraq cheered Manila's lifesaving decision to withdraw troops from the war-torn nation, but the move was criticized by Washington and its allies, who said the U.S.-led coalition would suffer.

Australian Foreign Minister Alexander Downer (search) called the Philippine ambassador in Canberra, Cristina Ortega, to say he was "extremely disappointed" with Manila's decision to pull its 51 soldiers and police from Iraq, Downer's spokesman Chris Kenny said.

"He said countries cannot give into the demands of terrorists because we would all pay the price," Kenny said.

Downer said South Korea "did the world a favor by saying that they wouldn't be bullied by terrorists."

Iraqi insurgents killed a South Korean hostage last month after Seoul refused to bring its troops home.

U.S. State Department spokesman Richard Boucher, speaking shortly before the withdrawal announcement, said any pullout "sends the wrong message" to hostage takers "at a time when Iraq is fighting for stability and peace."

In Japan, a key U.S. ally and major trading partner of the Philippines, a foreign ministry spokeswoman said the 500 Japanese troops will remain in southern Iraq to rebuild schools, provide medical supplies and supply clean water.

"We consider it important to continue activity" in Iraq, she said.

But in the Philippines — where the fate of truck driver Angelo dela Cruz (search), father of eight, has gripped the nation — people praised the government's decision to withdraw the troops as demanded by the hostage takers before their deployment was scheduled to end on Aug. 20.

"That's good. The sooner the better," said Rep. Teddy Casino of the left wing Bayan Muna party, a strong opponent of President Gloria Macapagal Arroyo's (search) decision to send troops to Iraq in the first place.

"The only long-term option is really the complete pullout of Philippine troops, and ideally the pullout from the 'coalition of the willing,'" he told The Associated Press.

He said there would be fewer threats from anti-U.S. forces to the 4,000 Filipino contract workers in Iraq if the troops are brought home.

Dela Cruz's family celebrated the announcement with a hearty breakfast of fish and fried chicken in their northern home province of Pampanga.

"We are happy that they are pulling out the troops already in exchange for my brother's freedom," said Feliciano dela Cruz, brother of the captive. "We're thankful to the president if they will indeed be pulled out. And once they complete the pullout, [the captors] should give my brother to the president."

His sister, Beth Reyes, said the report of the pullout has "eased our worries."

"Since the news [of the abduction] broke out, we have not been able to eat well," she said.

The family twice celebrated news that dela Cruz — taken hostage last week — had been freed, but ended up frustrated and disappointed after learning the reports were based on wrong information.

Chat Dimaano, spokesman for Migrante International (search), a group helping Filipino workers abroad, said the government made a "good decision."

"They should have done this a long time ago," he said.

In a rare compliment to the government, Communist Party spokesman Gregorio Rosal praised "the positive development."

He said Arroyo was "pressured by the masses" to defend Filipinos abroad "over the interest of the U.S."

Filipino workers in Hong Kong expressed mixed reactions to the troop withdrawal.

"It's better to pull out than to kill our countryman," said Noel Tenorio, 42, a domestic helper.

Lourdes Ruba, however, worried that Arroyo's government has set a bad precedent in dealing with terrorists.

"We pray that Angelo is the first and the last," she said.

Another woman said that there are no guarantees about how the Iraqi insurgents will respond.

"They can still behead the man," said jeweler Erma Leung, 40.