Afghanistan has begun disbanding private security companies operating in the country, shutting down eight firms and seizing over 400 weapons, the Interior Ministry said on Sunday.

The move is part of President Hamid Karzai's ambitious plan to take over all Afghan security responsibilities from foreign troops by 2014.

Since Karzai's decree in August, a plan has been drawn up for the process which is expected to be complete by the end of the year, Interior Ministry spokesman Zemarai Bashary said. The United Nations and NATO-led International Security Assistance force had given it their support, he added.

"The interior ministry is implementing this plan with seriousness and decisiveness," he told a regular briefing.

The first targets are illegal armed groups operating as private security firms, companies with temporary permits and those who provide security escorts for foreign forces and have been engaged in criminal acts and security breaches.

The government has already closed down an Afghan security firm with 75 employees, and several smaller groups which provided security escorts for convoys, Bashary said.

Firms are exempt whose guards work inside compounds used by foreign embassies and international businesses and aid and charitable organizations.

General David Petraeus, the top U.S. and NATO commander in Afghanistan, said late last month that Karzai was also prepared to allow companies operating from some fixed sites, including power plants, to continue their work.

"The plan is arranged in a such a manner that it does not create a security gap, yet at the same time (we can) dismantle the private security companies," Bashary said.

Employees from the firms can join the Afghan security forces if they wish, he added.

IRRITATION SOURCE, COMPETING FOR CONTRACTS WORTH BILLIONS

Bashary said he did not have an estimate of the total number of firms, but there were 52 registered with the government, half of them foreign.

Kabul estimates that up to 40,000 Afghans are employed by these firms, seen as a parallel security operations outside government control. Their heavily armed guards forcing a route through traffic is a common sight on Afghan streets.

Many Afghans see them as operating with impunity, and they have been accused of a series of killings, crimes and scandals, but have rarely been convicted.

Karzai's government tried unsuccessfully last year to register the firms, find out the amount of arms they had and where they came from, and how much money the industry was worth, an Afghan security source has said.

The U.S. State Department said last year it would review its use of contractors at overseas embassies after a scandal over sexual hazing by security guards at its Kabul mission.

When Karzai issued the deadline for the closure of the firms in August, the Pentagon called the deadline "very challenging" but said Washington would work with Kabul and seek to improve oversight and management of private security firms.

(Editing by Emma Graham-Harrison and Jonathan Thatcher)