Yemen's descent into chaos has undermined the US campaign against Al-Qaeda there, forcing Washington to abandon a strategy once touted as a model for counter-terrorism efforts.

President Barack Obama's decision last week to withdraw all remaining US troops in Yemen from a base in the south underlined the gravity of the situation, with Al-Qaeda in the Arabian Peninsula (AQAP) now potentially posing an even greater danger to the West, experts and former intelligence officials said.

"Certainly a repositioning of our forces out of Yemen would make our fight against AQAP more difficult, there is no question about that," Pentagon spokesman Colonel Steven Warren told reporters Tuesday.

"That said, we continue to have the ability to hunt and kill Al-Qaeda terrorists anywhere they are," Warren said.

The Obama administration had long hailed a partnership with the Yemeni government as a successful way to wage war against the most dangerous branch of Al-Qaeda.

Washington had sent in US special forces units and provided weapons to Sanaa to help the army hunt down Al-Qaeda militants. With Yemen's collaboration, Washington carried out more than 100 drone strikes against AQAP extremists since 2002, according to a tally by the New America Foundation.

The approach was praised as an alternative to counter Al-Qaeda without committing large numbers of ground troops in drawn-out occupations as in Iraq or Afghanistan.

But Yemen's President Abdedrabbo Mansour Hadi has fled to the south in the face of advancing Huthi Shiite militia. With no viable partner to work with and the country on the brink of all-out civil war, the US strategy is now in tatters.

"Definitely our counter-terrorism efforts and those of our principal ally, the Saudis, have been dealt a very significant setback," said Bruce Riedel, a former CIA officer who has long tracked extremist threats in the Middle East.

"We no longer have an embassy. We no longer have boots on the ground," added Riedel, a fellow at the Brookings Institution.

- Loss of intelligence -

The US still has drones and other aircraft at bases in Saudi Arabia and Djibouti that could go after Al-Qaeda in Yemen, but the Americans can no longer count on a flow of crucial intelligence as followers of Hadi are now preoccupied with a fight against their Huthi foes.

"Maybe we can launch drone strikes from other countries, but if you don't have that intelligence on the ground, how do you know who to hit and where and when?" Michael McCaul, the Republican chairman of the House Homeland Security Committee, told ABC News on Sunday.

However, the Huthis are deeply hostile to Al-Qaeda and will be able to keep them out of mainly Shiite areas in the north and west, experts said.

Despite the enmity of the Huthis, AQAP will be in a stronger position -- at least in Sunni regions to the south and east -- as it will no longer face constant pressure from the United States and the Yemeni government, Riedel said.

"The threat from Al-Qaeda in the Arabian Peninsula probably goes up," Riedel told AFP.

AQAP, which has been linked to more than one attempt to blow up aircraft bound for the United States, will likely "have more freedom to operate and that means the risk of another bomb attack on an American airliner has to be considered higher."

- Proxy war -

Washington's only alternative will be to work with its Gulf allies, Saudi Arabia and Oman, as well as forces loyal to president Hadi, to check AQAP, analysts said.

But Shiite Iran is believed to be backing the Huthis, and Tehran's rivals in Saudi Arabia will be keen to focus on the Huthis, who they see as a more serious threat.

The US government will need to persuade its Gulf allies to look for a peace deal that could defuse the growing unrest in Yemen, according to Jon Alterman of the Center for Strategic and International Studies.

"Circumstances call for a hard-minded deal that circumscribes the influence of all, inside and outside of Yemen, and grants some degree of autonomy to the various populations in the country," Alterman wrote.

He said that "reaching some sort of understanding in Yemen would create the basis for broader regional accommodation on a variety of proxy conflicts, reaching into Syria, Libya, and beyond."