First word of the handover of power in Iraq emerged as President Bush was attending a NATO summit session in Istanbul, Turkey. Officials close to the president say he was pleased, adding it's a proud day for the Iraqi people.

The White House says the early handover will strengthen the ability of the Iraqi interim government to deal with the threats posed by militants and terrorists.

A senior administration official strongly denies Washington dictated the timetable for the transfer of sovereignty. He insists the decision to move ahead of schedule was made solely by Iraq's interim Prime Minister Iyad Allawi.

The official, who spoke to reporters on condition he would not be identified, said discussions on moving up the transfer day began about a week ago. He says Mr. Allawi informed the coalition authority in Baghdad on Sunday that his government was ready to assume sovereignty. That word was passed on to President Bush, who was already in neighboring Turkey for the NATO summit.

The official told reporters the Bush administration has always believed that power should be transferred to the interim Iraqi government as soon as it was ready. He said Iraqi officials are now - in his words - "calling the shots."

There were indications that Iyad Allawi might want to impose some kind of martial law once the handover took place. The U.S. official said he did not know if such action might actually occur. But he acknowledged the threat posed by militants and terrorists in Iraq will not fade away simply because Iraqis are back in control of the country.

The official was asked if President Bush might travel to Baghdad at the end of the NATO summit. He said there will be no changes in the president's schedule. But he left no doubt the president was pleased with the dramatic turn of events in Baghdad.

Mr. Bush was in a brief public session marking the beginning of the closed-door NATO summit when the transfer actually took place. He looked at his watch, and then leaned toward British Prime Minister Tony Blair. The two men - strong allies on Iraq - exchanged a few words and shook hands.

The president and the prime minister will hold a one-on-one meeting later in the day. At that time, they are expected to make their first public comments on the latest dramatic developments in Baghdad.