Jack Straw used an unannounced visit to Baghdad yesterday to claim that the security situation would improve with the transfer of power.

The foreign secretary hosted a morale-boosting party for British coalition staff at the British Embassy, which has moved inside the coalition headquarters compound.

But yesterday also saw Washington's strategy for formally ending the occupation of Iraq condemned by the country's most influential Shia Muslim cleric.

Grand Ayatollah Ali al-Sistani said proposals were incomplete and paid too little heed to Islam.