The United States has transferred power to an interim government in Iraq, bringing an end to 15 months of foreign occupation that began with a U.S.-led invasion and the toppling of Saddam Hussein. The transition took place two days ahead of schedule because of concerns that terrorists could disrupt it.

"This is a historical day," said Iraq's Interim prime minister, Iyad Allawi, who took the reins of power from American administrator Paul Bremer, the man who for the past year has been the country's defacto leader. Now recognizing his status as the former top official in Baghdad, he presented a letter at Monday's ceremony acknowledging Iraq's sovereignty. "We welcome Iraq's steps to take its rightful place of equality and honor among the free nations of the world, sincerely, L. Paul Bremer, ex-Administrator of the Coalition Provisional Authority," said Mr. Bremer. He then boarded a U.S. military plane, waved goodbye from the doorway and flew out of the country, the transfer of power complete.

Members of Iraq's interim government were then sworn in. The arrival of incoming U.S. Ambassador John Negroponte signaled the resumption of diplomatic relations between Washington and Baghdad for the first time in more than a decade.

Few people apart from Paul Bremer knew that Monday's handover had been changed from Wednesday and the low-key ceremony was not announced in advance.

Prime Minister Allawi had asked that the handover be moved up. "We feel we are capable and in control of the situation and the security situation," he said.

It happened as President Bush along with other leaders of NATO were attending an alliance summit in Turkey where the NATO members pledged to help train the new Iraqi military. "Two days ahead of schedule, the world witnessed the arrival of a free and sovereign Iraqi government. Iraqi officials informed us that they are ready to assume power and Prime Minister Allawi believes that making this transition now is best for his country," said Mr. Bush.

One of the next steps will be a symbolic transfer of custody of Saddam Hussein who U.S. General Mark Kimmtt expects will soon be indicted by an Iraqi court. "We have agreed that there will be a process by which the legal custody of Saddam Hussein will return to the people of Iraq. We will maintain the physical custody," he said.

The sovereign Iraqi government has made its main goal preparing for upcoming elections and defeating the insurgency. But Monday's handover of power did not stop the violence, and at least five more foreign hostages are now being threatened with death by Islamic militants.

Even though Iraqis now have political power, foreign troops, including nearly 140,000 Americans, will remain in the country and report to an American, and not an Iraqi commander. But the sovereign Iraqi government is now free to demand they leave, despite the fact that U.S. officials see no end to what was termed, until Monday, a U.S. military occupation.

Deputy U.S. Defense Secretary Paul Wolfowitz says American forces could remain in Iraq for years, given the continuing violence and the fact that Iraqi defense forces are not yet prepared to take on the job of securing the country.