The killing of two US soldiers in Baghdad within 24 hours last week shows how far the US and Britain still have to go to end the chaos gripping the Iraqi capital a month after the fall of Saddam Hussein.

Anger is growing among Iraqis at the Allies' failure to restore order in a cityawash with weapons and gangs. Heroin – banned under Saddam Hussein's dictatorship upon pain of hanging - is now being traded in back streets.

Residents of Baghdad – a conservative city with a large Shia Muslim population – are complaining that the breakdown in order has accompanied the emergence of some western practices they view as offensive, and which were prohibited, or tightly restricted, under Saddam.

In al-Bataween – the worst of Baghdad's badlands which is blighted by carjackings and crime – residents say heroin is being traded in the alleys. "In Iraq there were no drugs until March 2003," said Salah Sha'amikh, a pharmacist. "You would be hanged for trafficking. But now you can get heroin, cocaine, anything." He pulled out a Russian-made 8.5mm pistol which he says he keeps to protect his wares.

"We are an Islamic society and we don't like drugs. You tell Tony Blair to stop these criminals." Gambling, also banned by Saddam, has begun to spring up too, to the concern of conservative Iraqis.