Residents of Baghdad have been celebrating National Sovereignty Day as the US completed the withdrawal of combat troops from all major Iraqi cities and towns.
The US will now hand over security in the cities to Iraqi security forces in the first major phase of the US-Iraq agreement for all US troops to leave the country by 2011.
The Obama administration has declared that the overall security situation is now stable enough for Iraqi forces to take over and that the 30 June deadline declared in the US-Iraq Status of Forces Agreement and signed by the Bush administration would therefore be honoured.
All members of the 131,000-strong combat forces have now withdrawn outside the country's major cities to form "layers of defence" around the cities and to focus on external borders.
Pentagon press secretary Geoff Morrell said that the security situation was now stable enough for Iraqi forces to take on this added responsibility.
"It's one that they want, and it's one that the commanders on the ground feel they are capable of taking on," Morrell said, speaking on CNN's Newsroom.
Since October 2008, the US has closed or returned 150 bases and facilities to Iraqi authority including 30 in June. Currently the only US forces present in the cities are non-combat advisors, trainers and support staff.
The US, however, has not declared the job done as the withdrawal sparked violence south of Kirkuk and in Sadr City claiming the lives of around 400 innocent civilians.
"If the Iraqi government were to ask for assistance, US forces are prepared to help. The US presence in Iraq will remain large enough to respond to any incident with which the Iraqis may request assistance," Morrell said.
The Pentagon has openly identified the Arab-Kurd tensions in the north, remaining al-Qaida in Mosul and Iranian meddling through the use of surrogates, as areas that still have to be worked through.
By Daniel Garrun.