Shia militia loyal to the firebrand cleric Muqtada al-Sadr have scuppered an attempt by British forces to hand over the Basra joint police command centre to Iraqi police.
Iraqi police reportedly left when the Shia fighters arrived and began emptying the facility. According to witnesses, they made off with generators, computers, furniture and even cars, saying it was war booty - and were still in the centre yesterday evening.
The embarrassing episode, which comes as the British in Basra are preparing to move their remaining soldiers to the city airport as part of a planned withdrawal, once again highlights the strength of the militia in the city.
It further undermines Britain's hopes of a smooth transfer and gives the impression of a rout. Mr Sadr boasted in an interview with The Independent last week that the British had "given up" and were retreating because of the Iraqi resistance.
A small detachment of British soldiers working with the Iraqi police left the central Basra building on Saturday evening.
However, the British military disputed the reports about the Shia militiamen turning up yesterday, saying they had been in contact with the Iraqi general in charge of security in Basra, who denied that Mr Sadr's Mehdi Army was there.
The withdrawal leaves British forces with just two military bases in Iraq, Basra Palace and Basra airport, provoking speculation that the army may be preparing to accelerate its withdrawal to the fringes of the southern capital.
Britain has reduced its military presence to just 5,500 troops in Iraq and intends to pull these remaining forces back to the airport and hand Basra province over to Iraqi control, possibly this autumn.
The head of the British Army, General Sir Richard Dannatt, said last week that his forces were under great pressure because they were deployed on two combat fronts, Afghanistan and Iraq. His comments were interpreted as an indication that government policy was to leave Iraq as soon as possible so the military could concentrate its resources on fighting the Taliban in Afghanistan.
The Americans were reported yesterday to be planning to fill any gap left by the British by sending around 3,000 troops to Basra.
The report appeared to confirm previous comments by an American army general, Jack Keane, who was vice-chief of staff at the time the Iraq war was launched in 2003. He warned last week that any British withdrawal from the country may need to be plugged by American forces.
But the Ministry of Defence denied last night that Saturday's handover of the police joint command centre in Basra was a signal for any kind of retreat.
A spokesman for the MoD said that the withdrawal was "in the framework of the plan for the handover" of British positions in the city to Iraqi control and its police force.
The British military had maintained a small number of soldiers at the command centre to help train Iraqi police. The MoD said in a statement: "There had been a small presence up to now of British forces in the PJCC (Provincial Joint Co-ordination Centre) for the support and mentoring of Iraqi police.
"These forces were moved from the PJCC in the framework of the plan for the handover of the Basra Palace to Iraqi control, though British forces currently remain at the palace base."
The MoD also tried to scotch any suggestion that the Americans were poised to send a stabilisation force to southern Iraq in the wake of a British pull-out.
"There hasn't even been a decision as to when we leave Iraq so this proposal seems very unlikely," said the spokesman.
The MoD said Basra does not have the heavy fighting experienced in Baghdad and Iraqi forces are demonstrating that they can take the lead in the city.