Yet almost six months on, life has improved little - and in some cases got much worse - under the stewardship of the Coalition Provisional Authority (CPA). For many of Basra's estimated 1.2 million inhabitants, deprived of reliable supplies of power and clean water, the joy of liberation has all but faded.

'Nothing has changed,' says a Shia cleric in Basra. 'If anything our lives are almost as bad. Few people are in work and thieves are everywhere. The US lost power for 30 minutes but we have had almost no electricity for the last six months.' The picture in the region's three other governorates of Maysan, Thi-Qar and Muthanna is little better.

People's frustration at persistent fuel shortages and power outages boiled over in early August, when two days of rioting erupted in Basra. Thousands of irate Iraqis spilled onto the streets building barricades of burning tyres and attacking British troops as tempers frayed in the 50°C heat. Prior to the episode, which left three dead including a Nepalese security guard, the city had avoided the random acts of violence that have plagued Baghdad.

'I recognise people's frustration but the picture that is often portrayed is too bleak,' says Hilary Synnott, regional co-ordinator, CPA South. 'There are high expectations here but they may be unrealistically high. When a regime falls and is replaced by another, people expect nirvana but life is rarely that simple. What is not always recognised by the people of Iraq is the state of decay of many of the essential services we are trying to fix.'

Matters in Basra took another turn for the worse in late August when the influential Shia leader Ayatollah Mohammed Baqr al-Hakim was assassinated. Two car bombs, detonated outside the Imam Ali mosque in nearby Najaf, killed the former exiled leader of the Iranian-backed Supreme Council for the Islamic Revolution in Iraq (SCIRI) and almost 100 of his congregation. A four-man group of former Baathists and Wahhabi separatists was arrested in connection with the atrocity. The sectarian implications were ominous.

The incident prompted thousands of angry Shia to spill onto Basra's streets to vent their anger, demanding tighter security from the coalition forces. Al-Hakim's death was seen by many as the opening shots of a sectarian conflict in Iraq. And nowhere is the economic and social divide between Shia and Sunnis more vivid than in Basra.

However, the CPA is quick to dispel any murmurs of civil unrest erupting in the wake of the bombing. 'There are people here who do not want to see any co-operation between the CPA and the Iraqi people succeed and it's important to recognise this factor. I would not characterise the Najaf bombing as the realisation of sectarian strife,' says Synnott. 'Yes, security is troublesome. However, I doubt that the riots and disturbances we have had reflect a boiling over by the people of southern Iraq.'

Bridging the gap between Sunnis and Shia remains a major challenge for the CPA. The appointment in late July of a 31-member interim governing council in Basra headed by Judge Abdulatif Wael was the first step. The judge, who was disbarred and imprisoned by the former regime, is also a member of Iraq's main governing council. His presence on the council gives the city its best chance in a generation for fair representation in Baghdad.

Yet the CPA is aware it has a long way to go before all the old wounds are healed. 'It is impossible to overstate how much of a dominating control the previous regime had on all walks of life here,' says Colonel Richard Barrons, chief of staff, coalition forces in the south. 'You only progressed as a doctor, lawyer or engineer if you were connected to the Baath party. All forms of patronage flowed from it so when it was removed the central controlling mechanism went with it. There isn't an alternative model that Iraqi society in Basra will default to, because it has had 30 years of internal repression by the Sunni-led Baath regime and a legacy of under-investment so that most things are broken or about to break.'

Fixing this dilapidated infrastructure is essential. And restoring the south's moribund power generation and water treatment facilities is at the top of the agenda. Shortages of electricity were exacerbated in early September when a fire knocked out the 400-MW Hartha station. The accident reduced output for the entire southern grid to a mere 537 MW. Work is under way to restore output from Hartha but the CPA's ability to react to such incidents is constrained by a lack of funds.

'A much more solid strategy needs to be defined for the power and water sectors and I believe this is happening,' says Charles MacFadden, director of reconstruction, CPA South. 'However, the resources we have at our disposal are small compared with the job that is required and we may have to talk to Baghdad and other donors about the availability of more funds to put things back into good shape again. We are short of cash but we do expect more funds to be made available. Unfortunately, some projects will move faster than others.'

The CPA is running out of money fast. Official sources in Baghdad say less than $200 million remains in the kitty of the original funds appropriated for the reconstruction of Iraq. No additional spending is expected until after the US congress votes on President Bush's supplemental funding bill and the international donors' conference scheduled for late October in Madrid. Until then, CPA South will have to make do with the existing funds left at its disposal for essential projects.

The worsening security situation in the south is not helping matters either. Engineers are restricted in their movements in and around Basra for fear of becoming targets. Armed guards are a fact of life. 'Access to project sites is slowing progress in reconstruction. If security improves then our ability to properly assess and study projects will make life easier. At the moment it is difficult to travel to projects and therefore make any decisions quickly. Security has made it very hard for us to physically do the work that is needed in the south,' says MacFadden.

Responsibility for hunting down Saddam's supporters and the gangs, which have turned Basra's streets into a shooting range, falls on the shoulders of the British army. The UK military, with years of internal security experience gained on the streets of Northern Ireland, is employing a starkly contrasting strategy to its US counterparts. British soldiers keep a low profile when on patrol and commanders have avoided committing large numbers of troops to guarding static sites.

Some have accused the British of taking too soft an approach and, by doing so, effectively handing the streets over to bands of armed gangs. Gun battles and punishment killings are a regular occurrence in Basra as rival factions fight for control of the city's black market. Criminal activity is made worse by the ready availability of arms. Russian assault rifles can be obtained for $70 and hand-grenades go for as little as $1 on Basra's streets. However, with limited resources at their disposal the UK military may be spread too thin to clamp down.

'It's not just a question of the number of troops required. If you take the southeast region we cover an area the size of Iowa with about 13,000 troops. The UK has announced the deployment of more forces but real security is not just about putting soldiers on street corners, the key is to get the basic infrastructure running, with Iraqis mending it guarded by Iraqis who know how to guard it, and to stimulate the economy,' says Barrons.

If the CPA is to stimulate the economy then protecting the south's vital oil installations from looting and sabotage is essential. South Oil Company (SOC), which is producing about 1.3 million barrels a day (b/d) of crude, is plagued by attacks on its pipelines. Smugglers present the biggest danger. They tap into pipelines then ship the contraband oil via small freighters operating from illicit terminals dotted along the Shatt al-Arab waterway. According to SOC officials, smugglers are making off with up to 10,000 b/d of crude.

'Since the end of the conflict more of the country's infrastructure has been dismantled by Iraqis than by bombs during the conflict. This is the greatest challenge we face at the minute. We need to ensure that water, electricity and oil can be supplied on a more reliable basis, which is a task made harder when, in the dark, bits are being taken away,' says Barrons.

Rebuilding Iraq is proving to be a tougher task than anyone had previously anticipated. In the south, the joy that followed liberation has been consumed by the grind of a long, hot summer made worse by a lack of clean water or electricity. But the clock is ticking and the CPA will not have forever to put things right.