PORTS and ferries group P&O has failed in its bid to operate Iraq's only deep water container port at Umm Qasr.

P&O lost out to an unnamed US firm after putting in a request to the US Agency of International Development (USAID).

The site off the Persian Gulf - an early target for coalition troops - will be the main gateway for humanitarian aid once it has been cleared of mines.

P&O, which has a presence in 17 countries and 27 container terminals, said the opportunity to run the port would have "played to its strengths".

Spokesman Peter Smith confirmed its bid had been unsuccessful. "Although that is a disappointment, it was not a major contract to us."

Mr Smith conceded the project carried some risks, but added these were outweighed by the opportunities. The nearest P&O site is Port Qasim, Pakistan.

The news comes amid growing fears that UK companies will miss out to US counterparts in the race for reconstruction work.

Balfour Beatty and Amec are thought to be among UK firms keen to secure Iraq contracts.