British soldiers in southern Iraq are pulling out of their last base in the city of Basra, fuelling concerns about the security of the country's second-largest city and its surrounding region.

U.S. and Iraqi authorities have expressed concern that a broader British troop withdrawal could jeopardize the region's rich oil resources and the land supply line from Kuwait to Baghdad and beyond. Some analysts also fear that a British withdrawal could exacerbate a violent power struggle between rival Shia groups in the sect's southern heartland.

British military vehicles pull out of Basra on Monday.
(Cpl Steve Follows/Associated Press)

Around 550 soldiers were Sunday leaving the downtown Basra Palace, one of Saddam Hussein's former compounds, to join 5,000 other personnel at an air base 11 kilometres away on the fringes of the city. Defence officials said the withdrawal was going well but could take days to complete.

The Iraqi military sent hundreds of reinforcements to the city to prevent Shia militias and criminal gangs from expanding their influence once the British are gone.

British PM to outline future Iraq strategy in October

Former British prime minister Tony Blair reduced the number of British troops in Iraq from 7,000 to 5,500 in February and left open the option of pulling out around 500 more personnel once Basra Palace was handed back to Iraqis.

Prime Minister Gordon Brown is due to set out future strategy for British operations in Iraq in a speech to Parliament next month.

The British defence ministry said forces operating from Basra Air Station will "retain security responsibility for Basra until we hand over to provincial Iraqi control, which we anticipate in the autumn."

Basra Palace was to house British soldiers and diplomatic staff after the 2003 U.S.-led invasion and has come under daily mortar and rocket attack in recent months.

'Sensible military decision': opposition

"This is a thoroughly sensible military decision," said opposition Conservative lawmaker Patrick Mercer. "It will allow more troops to be withdrawn from Iraq in the autumn, just as Britain increases its numbers of troops in Afghanistan."

In Basra, Britain's military spokesman Maj. Mike Shearer told reporters, "I can confirm that an operation is ongoing, but we will not give any further details."

U.S. officials have raised concerns about the prospect of British troops leaving the city, which fell under the influence of Shia religious parties and militias, some with ties to Iran, after the January 2005 election that brought Prime Minister Nouri al-Maliki to power.

The police force is heavily infiltrated by militias. Political rivals, liquor dealers, DVD shop owners and anyone who violated different groups' interpretations of Islam was subject to assassination by death squads.

Retired U.S. army general Jack Keane, who was vice-chief of staff at the time the Iraq war was launched, said in an interview last week that Britain had never deployed enough troops to properly stabilize the region and allowed a bad security situation deteriorate.

"It has always been our intention to draw down troops in Basra," as Iraqi army and police become ready to handle security duties, said a spokesman for Brown's Downing Street office.

The International Crisis Group, a Brussels based think-tank, said in a June report that unconstrained militias were destabilizing Basra and that locals believed British forces had been driven out.

"Relentless attacks against British forces in effect had driven them off the streets into increasingly secluded compounds," the report said. "Basra's residents and militiamen view this not as an orderly withdrawal but rather as an ignominious defeat."

With additional Iraqi soldiers in the streets, residents say things have quieted in recent weeks.

But last week, the head of the security committee on the Basra city council, Hakim al-Miyahi, predicted "some disorder" after the British pullout from the city because he feared that Iraqi forces were incapable of maintaining order.