British troops quit the Iraqi city of Basra on Monday, leaving the southern oil hub without British forces for the first time since the U.S.-led invasion that toppled Saddam Hussein in 2003.
The withdrawal from the besieged Basra Palace complex, under daily mortar and rocket fire by Shi'ite militias, is a step towards handing over Basra province to Iraqi control and an eventual British pullout from Iraq.
Members of the Shi'ite Mehdi Army cheered the withdrawal as a victory for the militia and a defeat for Britain.
"They were facing catastrophe and withdrew because of the attacks by the Mehdi Army," Mehdi Army fighter Abu Safaa said.
The withdrawal will lead to a cut in British soldiers to about 5,000 -- all now concentrated in a vast air base, also under daily attack, on the outskirts of Basra.
A surge in attacks this year has killed 41 British soldiers - the highest number of casualties suffered by the British since the first year of the war.
British Prime Minister Gordon Brown rejected suggestions the troops, about 500 in all, were retreating under fire.
"This is a pre-planned and ... organised move from Basra Palace to Basra air station," Brown told BBC radio. "This is essentially a move from a position where we were in a combat role ... to being in an overwatch role."
The British military in Basra said there had been no attacks on British forces during the withdrawal to the airport.
Major-General Mohan al-Firaiji, commander of Iraqi security operations in Basra, said the pullout was completed just before dawn and "the Iraqi army took responsibility for protecting the palace".
Iraqi soldiers were on guard outside the main gate into the palace, built for Saddam, and Iraqi flags were hoisted over the building.
