Iraqi flag signals the transfer of power in Basra

The Iraqi flag was fluttering over Basra Palace yesterday, in a potent symbol of British withdrawal from the last base inside the city. Both British and Iraqi officials declared a successful transition from UK to local control and insisted that law and order will not collapse.

Gordon Brown denied that their withdrawal amounted to a defeat. However, the sight of supporters of the Shia militia Mahdi Army jeering from the roadside that the departing British troops had been defeated, suggested that southern Iraq has not been transformed into a civic society.

The fact that more than 500 troops had negotiated the "ambush alleys'" from the palace to the airport in the outskirts of the city is regarded by the British military as a major achievement. Commanders had drawn up contingency plans taking into account significant numbers of dead and injured resulting from the evacuation.

The British force, the 4 Rifles Battle Group, had been under constant mortar and rocket attacks at the base and been hit by roadside bombs while out on patrol.

The timing of the withdrawal stemmed from a decision of the leader of the Mahdi Army, the radical cleric Moqtada al-Sadr, who called a six-month ceasefire. In addition, an Iraqi commander sent down from Baghdad, General Mohan al-Furayji, brokered a truce with local fighters to allow British troops to leave the city.

Gen. Mohan felt that the presence of foreign troops in Basra was the main source of violence and their absence should lead to a decrease in attacks.

Significantly, the British now agree with Gen. Mohan that the presence of foreign forces in Iraq is now counterproductive.

A senior British official said: "General Mohan was of the opinion that Basra would be better off without us, and since he is representing the Iraqi government it is obviously something we have to take very seriously. Our leaving basically means that the extremist militias have less excuse to engage in lawlessness and violence.'"

British and Iraqi government commanders have also been engaged in extensive behind-the-scenes negotiations with Shia factions in an attempt to isolate the "extremists", allegedly Iranian-backed. Officials claim that this was one of the main reasons for a downturn in attacks against British forces in the last few weeks. There is continuing exasperation among British officials over American claims that the UK has "lost the south" and the region had deteriorated into "gangland warfare".

There is widespread fear among the locals that the two main militia groups, the Mahdi Army and the rival Badr Brigade, are preparing to ratchet up their internecine war for the control of the south of the country and its massive oil wealth.

The Ministry of Defence yesterday dismissed suggestions that the withdrawal had not been discussed with the US government. It said the decision had been taken with American backing and in consultation with the Iraqi administration.