We give a new algorithm for the formal reduction of linear differential systems with Laurent series coefficients. We show how to obtain a decomposition of Balser, Jurkat and Lutz using eigenring techniques. We establish structural information on the obtained indecomposable subsystems and retrieve information on their invariants such as ramification. We show why classical algorithms then perform well on these subsystems. We also give precise estimates of the precision on the power series which is required in each step of our algorithm. The algorithm is implemented in Maple. We give examples in [14].