Iraqi soldiers hoisted the nation's flag over the Basra palace compound Monday after British troops withdrew from their last garrison in the city, a move that will hand control to an Iraqi force riddled with Shiite militiamen.
A British statement said the operation began at 10 p.m. Sunday "with all British troops arriving at the airport by midday" Monday.
"There were no clashes or attacks on British forces during the operation. The formal handing-over of the Palaces will happen in the near future," British spokesman Maj. Matthew Bird said.
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The departure of most of the remaining 500-member British force from the palace left the nation's second largest city without any multinational presence for the first time since the U.S.-led invasion of 2003.
"We told those (militias) who were fighting the British troops that the Iraqi forces are now in the palaces," Lt. Gen. Mohan al-Fireji, the Iraqi commander in the area. He said the last of the British force left about 4:30 a.m.
British vehicles rumbled out of the gates of the sprawling compound after dark Sunday headed for the Basra international airport, about 12 miles away. It is Britain's last remaining base in southern Iraq.
U.S. officials have raised concerns about the prospect of British troops leaving the city, which has seen rival armed militia groups, some linked to Iran, battling for control.
The city controls a key land supply line from Kuwait to Baghdad and farther north, and is also near important oil fields.
In London, Prime Minister Gordon Brown disputed claims that the redeployment marks a British "defeat" and said the move to the airport had been planned and organized.
"Let me make this very clear. This is a pre-planned, and this is an organized move from Basra Palace to Basra Air Station," he told BBC Radio 4.
The Basra palace had come under near daily rocket and mortar fire from Shiite militias until the British released about 30 gunmen a few months ago and spread the word that they would soon leave.
Over the past years, Britain's ability to control events in Basra waned as the militias rose in power.
People on the streets of Basra cheered the departure of the British.
"We reject any strangers and they are colonialists," resident Rudha Muter told Associated Press Television News. "We are pleased that the Iraqi army are now taking over the situation. We as an Iraqi people reject occupation. We reject colonialism. We want our freedom."
Another resident, Khazaal al-Nisiri, said he was confident the Iraqi army would be able to provide enough security without the British presence.
"We have recently seen intensive deployment for Iraqi security troops — this indicates that the Iraqi troops are in full control of the situation," he told AP Television. "So the British troops pullout won't cause a vacuum in the area — our security troops are carrying out their duty well."
Following the collapse of Saddam Hussein's rule, Britain controlled security across southern Iraq, but has since handed over most of the territory to Iraqi forces.
Britain's Ministry of Defense said it hoped to hand security responsibility for Basra, the last remaining province, over to Iraqi forces sometime this autumn.
Brown has consistently refused to set a timetable for the overall withdrawal of British troops from the country, but the long anticipated pullout from the downtown palace will give the British government the option to pull out more than 500 soldiers immediately.
Ex-leader Tony Blair's decision to cut troops numbers in Iraq from 7,000 to 5,500 in February included an option of pulling out the soldiers based in the Basra palace once it was handed back to the Iraqis.
Britain's Defense Ministry said in a statement that U.S. officials had been consulted over the plan, and offered assurances that there was still a large enough British presence in the area to provide security.
"The decision is an Iraqi-led initiative and is part of a coalition-endorsed process," the ministry said.
British forces will operate from Basra Air Station, but "retain security responsibility for Basra until we hand over to provincial Iraqi control, which we anticipate in the autumn," the statement said.
Elsewhere in Iraq, a car bomb exploded in central Baghdad, killing two people and wounding five others, police said.
Another car bomb exploded at a police checkpoint outside Ramadi early Monday, killing two policemen and seriously injuring four others, as well as two civilians, said Ramadi police Lt. Col. Jubair Rashid Naif. The bridge, on a road that links Baghdad with Jordan and Syria, was unaffected by the blast, Naif said.
Complete coverage is available in FOXNews.com's Iraq Center.