ISTANBUL, June 28: US President George Bush checked his watch, whispered in British Prime Minister Tony Blair's ear, and shared a smile and a handshake with his closest ally on Iraq in a quiet but unmistakably joyful reaction on Monday to the handover of power there.

The silent celebration began when Defence Secretary Donald Rumsfeld passed Mr Bush a note during a meeting of NATO leaders, not all of whom knew that Iraq's new government was assuming sovereignty two days ahead of schedule.

The furtive message was from US national security adviser Condoleezza Rice, who wrote Bush: "Mr President, Iraq is sovereign. Letter passed from (US civilian overseer Paul) Bremer at 10.26am Iraq time - Condi."

While the alliance's secretary general spoke, Bush read the note, smiled, scrawled "Let Freedom Reign!" on the note with a black marker, and passed it back to Rumsfeld, who grinned broadly.

Bush rolled up his left suit sleeve, checked his watch - it was 10.17am (0717 GMT) - whispered a few words in Blair's ear, smiled and extended his hand, which the prime minister happily took as both leaders smiled.

The decision to hand sovereignty two days early - in an unannounced ceremony held under the tightest secrecy - came late Sunday after over a week of talks between Washington and interim Iraqi Prime Minister Iyad Allawi.

Blair, Bush, and NATO leaders with troops in the US-led coalition in Iraq knew that the handover had been accelerated, but other leaders in the same meeting who did not support the war were in the dark, US officials said.

French President Jacques Chirac only learned about it when Mr Bush announced it at the meeting, said a spokeswoman, Catherine Colonna. Bush and Blair came together again later to formally welcome the handover - which the president called "a proud moral achievement" - but temper their joy by warning of a hard fight ahead against insurgents and terrorists. And one White House aide ruled out a Bush trip to Baghdad to mark the handover, and added that on Wednesday, the date originally set for the transfer, "he'll be in Washington".

That did little to quell speculation among members of the White House press corps, most of whom Mr Bush left behind in November to make a surprise Thanksgiving Day visit to US troops in Baghdad.

The official downplayed talk that the secrecy of the ceremony only served to highlight the lack of security in Iraq and said the early timing proved the viability of US efforts to shift political power to the Iraqis.

"Our goal was to move as quickly as possible to enable the new Iraqi government to assume as much authority as possible" over day-to-day affairs, the official said. -AFP