WASHINGTON (Reuters) - Defense Secretary Leon Panetta has decided to lift the military's ban on women serving in combat, a move that could open thousands of front-line jobs to women, a senior U.S. defense official said.

The decision, which will be formally announced later, would give the individual military services until 2016 to seek an exemption if they believe any jobs should remain closed to women, the official said.

"This policy change will initiate a process whereby the services will develop a plan to implement this decision, which was made by the secretary of defense upon recommendation of the Joint Chiefs of Staff," the official said.

The decision overturns a 1994 policy that prevents women from serving in small front-line combat units.

(Reporting By David Alexander; Editing by Sandra Maler)