TONY BLAIR and George Bush last night hailed the birth of a "sovereign and free" Iraq - but the decision to hand over power saw no end to the bloodshed.

As the US-led coalition unexpectedly gave power to the new government in Baghdad two days early, it was announced that a British soldier had been killed in an attack on his Basra convoy.

An "improvised explosive device" was believed to have been used against the patrol, said the Ministry of Defence.

Last night, the dead soldier was named as 19-year-old Gordon Gentle, from Glasgow, who had recently joined the 1st Battalion Royal Highland Fusiliers.

He passed out from Catterick Garrison, in North Yorkshire, earlier this year and Iraq was one of his first overseas postings.

Private Gentle is thought to have relatives living in Darlington. Last night, they were believed to be heading for Glasgow to comfort his parents.

The first Battalion of the Royal Highland Fusiliers is currently based in Cyprus, with detachments in Iraq and the Falklands.

The ministry said its thoughts were with with Pte Gentle's family. Lieutenant Colonel Paul Cartwright, the Commanding Officer of the 1st Battalion Royal Highland Fusiliers, paid tribute to the teenager. "His name says it all," he said. "As a new member of the battalion, he settled in with ease, and always willing to help others."

Two of his comrades were injured. They were evacuated to hospital, but their injuries were not believed to be life-threatening.

The attack brings the total number of UK service personnel who have died during military operations in Iraq to 60 since the war began.

Asked whether it was not now time to bring British troops home, Mr Blair said yesterday: "One of the great things when you talk to the British soldiers down in Basra is that's not what they say.

"They feel a great sense of mission and purpose. They will tell you the difference they are making."

Yesterday's handover of power was intended to pre-empt any plans by militants to mark the scheduled June 30 transfer date with a series of bloody terrorist attacks.

Mr Bush and Mr Blair - the chief architects of the invasion - acknowledged that the formal ending of the occupation by coalition forces would not end the terrorist threat.

However, at a joint news conference in Istanbul where they were attending the Nato summit, the two leaders insisted that the day's events marked the start of a new era for the country.

"Fifteen months after the liberation of Iraq and two days ahead of schedule, the world witnessed the arrival of a full sovereign and free Iraq," the US President declared.

Mr Blair said: "Today is an important staging post on the journey of the people of Iraq towards a new future - one in which democracy replaces dictatorship."

The new Iraqi prime minister, Iyad Allawi, acknowledged that the biggest problem facing his fledgling administration was security.

With elections scheduled to take place in only seven months, he promised to crush the "outlaws" responsible for the terrorist violence which has left hundreds dead.

However, the new administration is likely to remain dependent on thousands of coalition troops for security for the foreseeable future.

Mr Blair and Mr Bush won a commitment from Nato leaders for the alliance to help train Iraq security forces.