The green zone of Baghdad, a highly fortified slice of American suburbia on the banks of the Tigris river, may soon be handed over to Iraqi control if the increasingly assertive government of Nouri al-Maliki, the prime minister, gets its way.

A senior Iraqi government official said this weekend the enclave should revert to Iraqi control by the end of the year. “We think that by the end of 2008 all the zones in Baghdad should be integrated into the city,” said Ali Dabbagh, the government’s spokesman.

“The American soldiers should be based in agreed camps outside the cities and population areas.

“By the end of the year, there will be no green zone,” he added. “The separation by huge walls makes people feel angry.” Dabbagh acknowledged that getting rid of the green zone would be a huge undertaking, given the thousands of American soldiers, private contractors and foreign workers who live inside. He said the concrete walls that divide it from the rest of the city would be taken down slowly, “depending on the threat and circumstances”.

The prospect may prove disconcerting for the Americans, who have just begun to transfer their diplomatic operations in the zone from Saddam Hussein’s Republican Palace to a new embassy, the largest and most expensive in the world.

The £300m building, at the heart of the green zone, protected by blast walls and layers of barbed wire, is the size of the Vatican City. It is virtually a self-contained town, with a heli-pad, sewerage and water treatment plants, a telephone exchange with a Virginia dialling code, a swimming pool and a bombproof gym. It will contain 619 blast-resistant flats.

Under the Baghdad government’s plan the embassy will remain but the Iraqis will take back the five-square-mile secure “bubble” surrounding it.

The green zone, which was built after the US-led invasion in 2003 as a safe administrative hub, has long infuriated Iraqis. It sliced off neighbouring districts from one another.

Mortars fall in the area but the kidnappings, car bombs and lack of water and electricity in the rest of the country seem remote to its inhabitants. Many American visitors never leave except to fly by helicopter to Baghdad airport.

The call for the “liberation” of the zone reflects Maliki’s growing confidence after military victories that have prompted him to declare that terrorism has been defeated.

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