British soldiers began withdrawing Sunday from their last base inside the southern Iraqi city of Basra, a move likely to prompt a further reduction in troop numbers, lawmakers and officials said.

Around 550 soldiers stationed in the Basra Palace base were leaving the downtown site to join 5,000 other personnel at an air base camp on the fringes of the city - ending their permanent presence in Iraq's second largest city.

The decision to leave the palace compound - targeted with daily mortar and rocket attack in recent months - will hand military commanders an option of pulling around 550 troops out of Iraq in the autumn, lawmakers said.