An Iraqi exile who was arrested by the U.S. military for declaring himself the mayor of Baghdad was freed Sunday and admitted the error of his ways, U.S. Central Command (search) said.

U.S. troops arrested Mohammed Muhsin al-Zubaidi (search) two weeks ago and accused him of subverting their efforts to set up an administration in the wake of Saddam Hussein's fall.

Before his release, al-Zubaidi acknowledged that he had overstepped his authority, Central Command said in a statement. It said al-Zubaidi issued his own statement, saying, "I am not the mayor of Baghdad, nor am I interested in working independently of the coalition to achieve what we all understand to be the same goal peace and prosperity for all Iraqis."

"I now realize that a number of my statements and actions have actually served to hinder progress in the very areas in which I was working to improve," al-Zubaidi was quoted as saying.

After Saddam's fall, Al-Zubaidi -- who was associated in the past with Ahmad Chalabi of the Iraqi National Congress, a London-based exile group close to the American military -- had cast himself as a volunteer to help Iraq get back on its feet. He declared himself mayor, set up shop at the Sheraton Hotel and opened offices in a country club next door.

Thousands of government workers turned up at the offices to re-register for their jobs, believing al-Zubaidi was in charge and assuming the Americans appointed him. Al-Zubaidi reportedly tried to fire employees at the government electricity company and replace them with his associates.

The U.S. military denied appointing al-Zubaidi, then ordered him to stop his actions, and in the end arrested him on April 27.

"It is important that self-appointed leaders do not spring from the void formed with the removal of the regime. There will be officials elected and appointed who will represent Iraqis," Lt. Gen. David McKiernan, commander for the Coalition Forces Land Component Command, was quoted as saying in Sunday's statement.