The fighters, followers of the Shia preacher Moqtada Sadr, had been locked in battles with US-led forces.

The peace talks were led by Iraq's top Shia leader Ayatollah Ali al-Sistani.

Mr Sadr was reported to have handed over the keys to the mosque. Speakers were broadcasting a message from him, telling his fighters to leave the area.

Dozens of fighters were seen piling their weapons on to carts.

Reports said US forces had withdrawn from the area around the mosque. Under the deal, they must leave the city altogether.