British forces in southern Iraq say they have asked a tribal leader to take over as the "mayor" of Basra.
UK forces are trying to establish control of Basra
The unnamed cleric will head a committee of local people to run Iraq's second city, where the British have overcome most Iraqi resistance.
But there is a desperate shortage of water, compounded by looters interrupting the supply of aid.
Elsewhere, British forces in southern Iraq have made their furthest advance north and crossed the River Euphrates.
The 1st Battalion Royal Irish Regiment has reached Al Qurnah, which is said to be the site of the biblical Garden of Eden and the birthplace of mankind.
The Irish troops were reportedly met by thousands of jubilant Iraqis, in an area populated by the persecuted Marsh Arabs.
In Basra, UK military spokesman Colonel Chris Vernon said the British hoped to move from a combat role to "post-conflict nation building" operations within a day or so.
The first move in this process will involve the setting up of a committee, broadly representative of local people, under the tribal chief.
Colonel Vernon said: "This person approached us. We met with him.
"We have ascertained he is worthwhile, credible and has authority in the local area, particularly with the tribal chiefs.
"We asked him to go away and form an initial committee to achieve a degree of civil administration."
The colonel said initial membership of the cleric's committee would be in his hands.
Although the ruling Baath party had been eliminated as a force in Basra, he said, some party members - and police officers - could be employed to restore order and infrastructure.
Policing could be a key role for the new administration.
On Tuesday, British troops had to fire into the air to prevent young men from stripping aid lorries bare.
The Red Cross has entered the city, where people are desperate for clean water.
BBC correspondent Clive Myrie said looting was a serious obstacle to getting aid into the city, and further violence was expected on Wednesday.
West: Black Watch, Scots Dragoon Guards, Irish Guards
Centre: 2nd Royal Tank Regiment
North and Docks: Royal Regiment of Fusiliers
South and Palace Area: 3 Commando Brigade Royal Marines
Old Town (on foot): 3 Battalion of Parachute Regiment
As well as aid lorries, thousands have also targeted hospitals, schools, banks, hotels and the police station.
Reporters said they had seen fridges, ceiling fans, fire engines, pieces of corrugated iron and even a grand piano being wheeled along the streets.
British forces have so far only intervened by firing warning shots in certain circumstances.
Their inaction has angered many civilians, but they claim they have not enough resources to act as a police force.
The BBC's Ben Brown said a UK commander had promised they would start arresting looters on Wednesday.
Captain Cliff Dare, 35, from Oxfordshire and with 3 Commando Brigade Engineer
Group, said: "We are looking at a regime change and it would be
unrealistic to expect things to sort themselves out overnight.
"The proof of the pudding has been in Umm Qasr where we turned it around in a
matter of days and reduced looting dramatically."
Meanwhile, British military divers are searching a flooded underground bunker near Basra for chemical weapons.
They believe it was part of the intelligence headquarters of Ali Hassan al-Majid, who ordered the gassing of thousands of Kurds in 1988.
In the UK, the Duke of York is to visit RAF Lossiemouth in Moray, Scotland, to meet the families of servicemen and women involved in the Iraq conflict.