The newspaper, citing British spokesmen, said that a private security assessment had recommended the measure after the consulate was hit by regular mortar attacks over the past two months.
According to the paper, there are about 200 staff at the heavily-fortified consulate building, including bodyguards and Gurkhas. Some 12 of them are full-time staff.
Some have already been evacuated by helicopter, and more are expected to go this week, it said.
They will either be moved to Basra air station, eight miles (13 kilometres) outside the city, or back to Britain, while a small staff will continue to run the consulate's operations until it is deemed safe enough for more to return.
A spokesman for the British foreign ministry, while insisting its officials were "not bailing out" told the newspaper: "This is a temporary measure as a response to increased mortar attacks ... Core staff will remain at Basra Palace and the consulate will continue to maintain a full range of activities."
A British military spokesman also stressed that the Basra diplomatic mission would remain despite the short-term withdrawal of staff.
"We believe very strongly that the Foreign Office and other agencies are critical to the long term solution in Iraq," spokesman Charlie Burbridge told the paper.
"We have worked closely in our shared endeavour and will continue to do so," he added.
Most of Britain's 7,000-strong force in Iraq is based in the south of the country.

Copyright AFP (Agence France-Presse), 2006