BAGHDAD — Basra residents gave warning yesterday of bloodshed in the city with political factions fighting for power after the last British soldiers left.

Prime Minister Brown denied that the withdrawal was a “retreat” at a time when criticism had been growing in American circles of Britain’s role in Basra. The coming weeks will now be crucial for the 30,000 Iraqi security forces around Basra as the three main local political parties vie for power.

Sheik Hazim al-Baghdadi, a leader of Moqtada al-Sadr’s Mahdi Army in Basra, claimed credit for driving out the occupying forces. “They ran away from us because we killed so many of them. They were tired. All they could do was flee for their dignity.”

Despite the claims, the prime minister denied that the redeployment of the final 550 troops from Basra Palace had been a “defeat.” “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 said. Mr. Brown said there was a development agency planned for Basra and British forces would continue to help to rebuild the economy.

“There are some signs of success that people are getting jobs, and that is one of the reasons why some of the violence has lessened, particularly of course violence lessened over the last few days,” he added.

Mr. Brown is expected to come under pressure to announce further troop withdrawals when Parliament sits again next month. It is possible that the force could be halved to 2,500 as pressure mounts for more troops in Afghanistan and with the prospect of an early general election.

But Liam Fox, the Conservatives’ defense spokesman said troops should not be risked to “satisfy the political needs of Gordon Brown’s government” and future moves should be based upon “the military reality on the ground.”

Sir Menzies Campbell, the Liberal Democrat leader, said the “retreat” underlined “the futility of the continuing British presence.” He added that the force based at Basra airport could not carry out “any useful military function.”

It appears that a deal struck with the Shiite cleric Moqtada al-Sadr allowed for a peaceful withdrawal of 4 Battalion The Rifles from Basra Palace.

Despite months of daily mortar and rocket bombardments, the security situation had apparently improved after television pictures showed British soldiers dressed only in fatigues as they handed over Basra Palace to the Iraqis. Normally, they would have been in body armor and hunkered behind high sandbagged walls.

As a bugler played, the flag of 4 Rifles was lowered to be replaced by the Iraq national emblem while British and Iraqi soldiers came to attention and saluted.

Lieutenant Colonel Patrick Sanders, the commanding officer of 4 Rifles who have fought from the barracks over the last five months, said that “on balance,” it was right to leave the city.

“It is time the Iraqi people take the security lead in their own way,” he said.

“Our actions in taking the fight back to the militias and strong relationship with the local population will leave them with the lasting courage and confidence to continue to stand up to the militias once we depart.

Lieutenant General Mohan al-Fireji, the Baghdad-appointed commander of Iraqi forces in Basra, said: “We told those who were fighting the British troops that the Iraqi forces are now in the palaces.”

News of the British withdrawal was welcomed by most of the Shiite majority population. “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,” Rudha Muter said.