LONDON British troops are pulling out of a base at a palace in the southern Iraqi city of Basra on Sunday, a Ministry of Defence source said.
The withdrawal is a step towards handing over Basra province to Iraqi control and paving the way for an eventual withdrawal of British forces from Iraq.
"The troops are coming out," the source said.
Some 500 of Britain's 5,500 soldiers in Iraq are stationed at Basra Palace, an old palace built for Saddam Hussein in the centre of Iraq's second city.
They are expected to pull back to the vast British airbase on the outskirts of the city.
It has long been expected that the British would withdraw its small, vulnerable garrison from the city and consolidate at the airport.
The withdrawal means the end of a British presence in the volatile city for the first time since the U.S.-led invasion that toppled Saddam Hussein in 2003.
The Sunday Times reported on Sunday that Britain was preparing to hand over control of Basra province to the Iraqi army as early as next month, enabling most of the 5,500 British soldiers to leave Iraq.