Iraq's Kurds have long cherished separatist ambitions and, while officials said the region will work closely with the national government in Baghdad, the symbolism of the moment was not lost on the former guerrilla fighters.

"It's a sort of independence," Colonel Shadman Ali of the peshmerga, the Kurdish security force, told AFP. "We are very glad and proud and have been waiting for this day for so long. It gives us a great source of hope."

Sulaimaniyah, Arbil and Dohuk provinces are ruled by the Kurdish Regional Government, which has its own executive and ministries and has been spared much of the unrest wracking the rest of Iraq.

"Today is another success in the process of rebuilding Iraq," Kurdish Prime Minister Nechirvan Barzani said at a ceremony in his capital, Arbil.

The handover was followed by a parade of Kurdish soldiers, including an all-female martial arts display.

"This is the result of the experience of 16 years," he said referring to Iraqi Kurdistan's history of de facto independence since the 1991 Gulf War weakened Iraqi dictator Saddam Hussein's grip on the mountainous north.

Organisers had planned to raise the Iraqi national flag to symbolise the transfer of authority but many Kurds wanted to raise their own regional flag, a horizontal tricolour of orange, white and green with a golden sun motif.

In the end, no flag was raised.

Controversy erupted in September when regional Kurdish president Massud Barzani forbade the flying of the Iraqi flag in the Kurdish region -- a move taken as a sign of the region's separatist ambitions.

"Kurdish forces are Iraqi forces," National Security Advisor Muwaffaq al-Rubaie emphasised forcefully to AFP as rank after rank of Kurdish soldiers, commandos, special forces units and police marched by.

Emblazoned on the soldiers' shoulders was the sunburst Kurdish flag.

Seven Iraqi provinces, including Najaf, Muthanna, Dhi Qar and Maysan, now have responsibility for their own security -- a third of the total. The United States hopes to add more as Iraqi forces grow in capability.

"Reinforcing the security of Kurdistan is reinforcing the security of Iraq," insisted Rubaie.

Unlike the rest of the war-torn country, the Kurdish provinces and their comparative security have attracted the interest of foreign investors, which has fuelled a construction boom in the region's cities.

"You're an example for the rest of Iraq," Major General Benjamin Mixon, the commander of US troops in northern Iraq, told the assembled dignitaries.

Turkey, which has a large and restive Kurdish population of its own, has long expressed dissatisfaction with the increasing autonomy of Iraq's Kurds.

Ankara accuses Iraq of allowing the separatist Kurdistan Workers' Party (PKK) of using the region as a rear-base to launch cross-border attacks.

Public pressure on the government to step up the fight against the PKK mounted after a bomber blew himself up on May 22 in a busy shopping centre in downtown Ankara, killing six people and wounding 121.