By James Kirkup in Basra
British military and intelligence officials in Iraq are confident that Mr Sadr's political allies have been all but routed in the elections.
Iraq held local elections last weekend which passed off largely peacefully with results set to be formally declared on Feb 22.
Unofficial accounts of the results in Basra suggest that Sadrist parties will take only one or two of the thirty-five seats in Iraq's second city, where 4,000 British troops are stationed awaiting their final withdrawal later this year.
British officials see the political setback as the latest sign of Mr Sadr's diminished importance in southern Iraq.
Less than two years ago, Mr Sadr and his followers appeared to be the most powerful group in Iraqi politics, threatening the prospects of the country's western-backed government.
But a high-stakes military operation in Basra last year launched by the Iraqi government with British military support dealt a severe blow to Mr Sadr's status and influence. He had backed militant groups attempting to control Basra which were effectively destroyed by government forces under the prime minister, Nouri al-Maliki.
Mr Maliki's political allies are expected to make the biggest gains in Basra, something British officials say will facilitate the UK withdrawal from the country, which is set to begin in May.
Mr Maliki is expected to replace the current governor of Basra with one of his own allies, consolidating central government control over the oil rich south and long, British commanders hope, furthering the development of the Iraqi army as a reliable military force.
Mr Sadr meanwhile remains in Iran whose Shia Muslim leadership had backed his attempts to exert influence over Iraq.
Some British sources are even questioning whether Mr Sadr will return from Iran, speculating that his standing has been irrevocably undermined over the past year.
"Sadr gambled against Maliki and the result was that Sadr lost and Maliki won," one British source said.
Provisional election results expected to be released as early as Friday are expected to show that Mr Sadr; s allies polled fewer than 30,000 votes in Basra.
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