Britain handed over security in Basra province to Iraqi forces today, effectively marking the end of nearly five years of British control of southern Iraq.
"Today we stand at a historic juncture and a special day, one of the greatest days in the modern history of Basra," provincial governor Mohammed Mosbah al-Waeli said at a ceremony at the last British base at an airport outside the city.
The British commander, Major-General Graham Binns, said Iraqi security forces had "proved that they are capable".
"I came to rid Basra of its enemies but I now formally hand Basra back to its friends," said Maj Gen Binns, who also led the force that captured the city from Saddam Hussein's troops in 2003.
A scaled-down British force will remain in southern Iraq confined to its base at Basra's airport, with a small training mission and a rapid reaction team on stand-by.
Responsibility for Iraq's main oil export hub - the last of four provinces once controlled by Britain - will be the biggest test yet of the Baghdad government's ability to keep the peace without troops from outside.
With Iraq's second-largest city, only major port and nearly all its oil exports, Basra is more populous, wealthier and more strategically located than any of the other eight of Iraq's 18 provinces previously placed under formal Iraqi control.
It has also often been more violent, although Iraqi forces say their 30,000 troops and police in the area can keep peace.
Many Basra residents are optimistic though others question whether Iraqi troops can maintain the peace.
Iraq's second city is a lively place, with restaurants open late and little of the barricaded neighbourhood siege mentality found in the capital, Baghdad.
The mainly Shi'ite southern province has escaped the sectarian warfare that killed tens of thousands of people in central and northern Iraq. However, it has been the scene of bloody turf wars between rival Shi'ite factions, criminals and smugglers.
Basra's police accuse militants of imposing strict Islamic codes and killing women for so-called "honour crimes". The factions agreed to a truce this month and killings are down.
A triple car bomb attack which killed about 40 people in neighbouring Maysan province last week served as a reminder, however, of the potential for violence in areas vacated by the British.
Britain now has 4,500 troops in Iraq, less than a 10th of the force then prime minister Tony Blair dispatched to help topple Saddam Hussein in 2003. Mr Blair's successor, Gordon Brown, has said the force will shrink to just 2,500 by mid-2008.
Basra province exports more than 1.5 million barrels of oil per day, providing nearly all Iraq's government funds. Some oil is also sold outside official channels by smugglers, many believed to have links to the region's squabbling militias.
Power is divided among three main factions. Loyalists of cleric Moqtada al-Sadr have wide influence on the streets, the rival Supreme Islamic Iraqi Council is powerful among the security forces and the smaller Fadhila party controls the governorate.
British forces began handing over the southern provinces last year but suffered ever-deadlier attacks as they withdrew. Of the 134 British service members killed by enemy action in Iraq, more than 30 died in a four-month period from April-July this year after Blair announced plans to withdraw from Basra.