Dogs sniffed for explosives, mobile phones were impounded and US officials bombarded reporters with contradictory orders and scant information just moments before Iraq formally regained sovereign powers.

Journalists had been hastily summoned for what was billed as US administrator Paul Bremer's last news conference before a handover not due until Wednesday, but the confusion and tight security suggested that something extraordinary was afoot.

Two days early, Bremer was to dissolve the US-led Coalition Provisional Authority (CPA), end more than 14 months of US-British occupation and turn over control to an interim government led by Prime Minister Iyad Allawi.

An explosion echoed over Baghdad about 90 minutes before the ceremony in the heavily fortified Green Zone compound, which contains CPA headquarters and Iraqi government offices.

US media officials had dropped some obscurely worded hints that the transfer of power might take place before June 30 - "Game day will be in the next few", said one email on Sunday.

But the timing was known only to half a dozen senior coalition officials the night before, a senior official said. US administrator Paul Bremer said interim Prime Minister Allawi had asked for the transfer of power to be brought forward because Iraqis were ready to take control.

But wrongfooting anti-US insurgents who have staged a bloody campaign of bombings, assassinations and other attacks before the handover was also a motive in the change of plan.

"It was a consideration," said a senior military official. "It has a beneficial effect that we will take advantage of and the Iraqi security forces will take advantage of."

Another official in the US-led coalition said Allawi's request to accelerate the handover was security-related.

"He made it clear to Ambassador Bremer that he was considering his overall security strategy when he proposed that sovereignty be handed over as soon as possible," he said.

Shortly after the ceremony ended, Bremer headed for the airport and left Iraq in a C-130 transport plane. There was no word on his immediate destination but one official said Bremer would eventually go to Washington.