Followers of the radical Shia leader Moqtada Sadr have withdrawn from the governor's office after occupying it on Monday. They agreed to pull out, but not before a gun battle with British forces.
By Dumeetha Luthra
BBC correspondent, in Basra
Shia protest at governor's office in Basra has ended
The confrontation began in the early morning with praise for Moqtada Sadr and denunciations against the United States and Israel.
His armed militia moved into the governor's office.
They were dressed in the Mehdi army uniform, all in black, their faces were hidden with balaclavas. All were carrying their Kalashnikov rifles.
They pasted pictures on the walls of the building and raised a flag from the roof.
Sheikh Sattar al-Bahadili is Mr Sadr's representative in Basra.
'Not an occupation'
He insisted that this was not an occupation but rather a peaceful sit-in.
He demanded the release of the cleric's top aide Mustapha Yacoubi who has been arrested by the coalition.
The men were careful to promote this image of a peaceful sit-in, they allowed journalists to watch the proceedings from the roof of the governor's house.
Around the building they rallied support for their cause.
Hundreds of supporters stood waving pictures of Mr Sadr and chanting his name.
But as the day progressed the mood changed.
On the roof, Mr Sadr's supporters began to get edgy when journalists saw them unpacking rocket-propelled grenades from their boxes.
They were setting the weapons up around the roof preparing to defend their peaceful sit-in.
More weapons were being brought in from outside.
Shia leader Moqtada Sadr's followers have withdrawn
Then the lull, people disappeared from afternoon prayers, all appeared quiet.
British forces who, up until then, had kept a very low profile, moved into the area.
There followed a half hour gun battle.
It is not clear who fired first, both sides claim it was the other. But there was an exchange of fire and two people were injured.
One critically: he had been shot in the head.
The British pulled out and the militia celebrated by dancing on the governor's roof waving their kalshnikovs in the air.
One man said they were not fighting against the British but against the Americans
However, Mr Sadr's followers have been at pains to differentiate between the British occupation and the Americans.
One man said they were not fighting against the British but against the Americans.
He said British behaviour in the south has been better than that of other coalition forces, in other parts of the country.
The occupation ended a few hours later.
Negotiations between the Islamic parties, the governing council and the British brought about the withdrawal.
The militia pulled out but in a celebratory mood. They moved off down the street, shouting Mr Sadr's name.
They had made their point. Mr Sadr's militia is willing to take on the coalition forces.