Control of Baghdad's fortified green zone, a symbol of the US-led occupation of Iraq, will pass to Iraqi hands today in one of many transfers of power taking place as the country regains its sovereignty almost six years after the invasion.

The keys to Saddam Hussein's Republican Palace, which served as the US Embassy, will also be given back to Iraq's increasingly assertive Government. In addition, US commanders returned control of a swath of Iraqi airspace at midnight and British Forces are due to hand back Basra airport in the south.

Some Iraqis welcome the long-awaited transition but others fear that little will alter on the ground, with US forces scheduled to be in Iraq for another three years and the green zone remaining a walled-off compound.

Major-General Mohammed al-Askari, the Iraqi Defence Ministry spokesman, said that January 1 was an important day, marking the moment that US and British troops in Iraq come under Iraqi government authority after the expiry yesterday of a UN Security Council resolution that has legitimised their presence since 2003.

“It is time that we Iraqis get our sovereignty,” he told The Times. “It will be a joy that Iraq has started to rise again and will resume its natural status.”

This morning, US and Iraqi officials will ceremonially sign documents enshrining the handover of power in the green zone, a four sq mile area that houses Iraqi government buildings, the British Embassy and a sprawling new US Embassy, where all US diplomats have now moved.

“We as an army feel that we were in a race and we have won the race and are now receiving our prize,” said Major-General al-Askari. The Iraqi Army was disbanded after the war but has since been rebuilt, and has more than 250,000 troops.

Soldiers from the Baghdad Brigade will take over responsibility for the green zone, although US forces and Peruvian guards working for a security company contracted to the US Government will still help to man some checkpoints. Many buildings have already been handed back to the Iraqi authorities, including several US military camps.

More will be vacated in the months ahead as the foreign part of the green zone - which also has a large residential area in which ordinary Iraqis and families of Iraqi officials live — shrinks into several secured pockets.

The most symbolic gesture is the handover of the Republican Palace, a vast, marble mansion, complete with a swimming pool and sweeping driveway. A canteen that served hot paninis to diplomats, military officers and visiting journalists fed its last customers this week, while a Starbucks-style coffee shop in a huge, marble-floored meeting hall also closed.

Taking over the palace after the invasion placed the US seat of power in a building linked intrinsically to the regime of Saddam Hussein. Even after sovereignty was handed back to a nascent Iraqi Government in June 2004, the palace remained a mark of the occupation, used for US embassy work and by hundreds of US, British, Australian and other coalition forces who operated in rooms in which Saddam's initials were often engraved in the wall.

Today's return of the palace to Iraqi control is part of a security accord between Baghdad and Washington finalised in December. The deal also maps out a timetable for US troops to withdraw from towns and cities by the middle of this year and to leave the country completely by the end of 2011.

Britain signed its own status of forces agreement with Iraq on Tuesday, barely 24 hours before the UN mandate expired. Under its terms, the remaining British presence of some 4,200 personnel will leave Iraq by the end of July. Australia, which has 42 staff officers in Baghdad, sealed a similar deal, while the other entities with contingents in Iraq — Estonia, Romania and Nato — have been given extra time to conclude the process. El Salvador has already started to move out its 280-strong force.

The scheduled exit of foreign troops and the increased authority of the Iraqi Government should give Iraq its greatest sense of sovereignty since March 2003.

Mohamad al-Bethani, 30, an Iraqi contractor who works in the green zone, said: “I believe that Iraq is going to become more sovereign. Every day I see many signs that the Iraqis are being handed power.”

Ahmad Jaseeb, a mechanic in Baghdad, disagrees, saying that the handover gestures are “just for the media to show that the Americans are following the security agreement and the Iraqi Government is working to become more sovereign. That will never happen until the last US soldier leaves Iraq.”

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