The statement by Prime Minister Nouri al-Maliki, however, stopped short of declaring an end to the offensive as the Shiite leader faced criticism that the government had been unprepared for the ferocious resistance mounted by al-Sadr's Mahdi Army militia.
Sporadic fighting, meanwhile, continued in Baghdad and Basra despite a tense calm that followed a peace agreement by al-Sadr.
The fighting in the capital and cities to the south has helped make March the deadliest month for Iraqis since last summer, according to figures compiled by The Associated Press.
At least 1,247 Iraqis, including civilians and security personnel, had been killed as of Monday, according to figures compiled from police and U.S. military reports. The figure was nearly double the tally for February and the biggest monthly toll since August, when 1,956 people died violently.
Iraqi government figures showed a similar trend, with at least 1,079 people were killed in March - 923 civilians, 156 security forces.
That was an increase from 718 the month before, including 633 civilians and 85 security forces, according to figures compiled from data provided by officials at the health, interior and defense ministries.
Underscoring the fragility of the peace agreement, Harith al-Edhari, the director of al-Sadr's office in Basra, demanded the government stop continuing random raids and detentions.
Al-Edhari's complaint followed a raid by Iraqi commandos on the house of a wanted Mahdi Army battalion leader that prompted clashes in a northern section of the city, although the suspect was not home at the time.
In ordering his militia to stop fighting on Sunday, al-Sadr also demanded concessions from the Iraqi government, including an end to the "illegal raids and arrests" of his followers and the release of all detainees who have not been convicted of any offenses.
U.S. and Iraqi officials insisted the operation was directed at criminals and rogue militiamen - some allegedly linked to Iran - but not against the Sadrist movement, which controls 30 of the 275 seats in the national parliament.
But the fighting mainly involved Mahdi Army fighters, provoking intense anger among al-Sadr's followers.
The agreement - said to have been brokered in Iran - stopped short of disarming the militia and left Iraq's U.S.-backed prime minister politically battered and humbled within his own Shiite power base.
However, al-Maliki insisted in a statement issued by his office that the operation launched a week ago Tuesday had achieved "security, stability and success" in Basra.
He also announced a seven-point plan to stabilize the area, including recruiting 10,000 more police and army forces from local tribes and moving to enhance public services for the embattled population of some 2 million.
Al-Maliki had promised to crush the militias that have effectively ruled Basra for nearly three years. The U.S. military launched air strikes in the city to back the Iraqi effort.
But the ferocious response by the Mahdi Army, including rocket fire on the U.S.-controlled Green Zone and attacks throughout the Shiite south, caught the government by surprise and sent officials scrambling for a way out of the crisis.
The confrontation enabled al-Sadr to show that he remains a powerful force capable of challenging the Iraqi government, the Americans and mainstream Shiite parties that have sought for years to marginalize him. And the outcome cast doubt on President George W. Bush's assessment that the Basra battle was "a defining moment" in the history "of a free Iraq."
With gunmen again off the streets, a round-the-clock curfew imposed in Baghdad last week was lifted at 6 a.m. Monday, except in Sadr City and two other Shiite neighborhoods. Streets of the capital buzzed with traffic and commerce.
Iraqis also cautiously emerged on the streets of Basra, Iraq's second-largest city, 340 miles southeast of Baghdad, with peddlers selling fruit from stalls and men cleaning up huge piles of trash from the roadsides.
Women shrouded in black and children also lined up to collect water and food from aid workers after days of curfew.
In other developments:
allowing scores of husband-and-wife soldiers to live and sleep
together in the war zone - a move aimed at preserving marriages,
boosting morale and perhaps bolstering re-enlistment rates at a
time when the military is struggling to fill its ranks five years
into the fighting.