The population grew fast, but conflict in the surrounding areas continued for a long time. It then became evident that Britain no longer wanted to carry the cost of having an armed garrison in the Orange River Sovereignty. In August 1853, Sir George Russell Clark, former Governor to Bombay, was sent as a special commissioner to Bloemfontein to make the necessary arrangements for Britain's withdrawal from the area.
On 15 February 1854, a meeting was held between Clark and the residents in the school building on St Georges Street to discuss the conditions of withdrawal. On 23 February 1854 the Bloemfontein Convention was signed, which gave the Orange River Sovereignty self governing status. Soon after, a provisional election was held where Josias Philippus Hoffman was chosen as President and William Collins as Secretary of the Orange River Sovereignty. The new administration was to receive an amount of 10 000 pounds from the British government to assist them through their first year of administration.
On 11 March 1854, Clark, together with staff and troops, left the Orange River Sovereignty and the area became an independent Republic. The name was changed to the Orange Free State and Bloemfontein became the official capital. The temporary government chose to purchase the Warden residence to be used as the official residence for the President of the OFS. An election was held to choose a new Volksraad and a new constitution was drawn up. In May 1854, JP Hoffman was elected as first State President, his advantage being his personal relationship with Chief Mosheshwe.
With the withdrawal of the British troops, Bloemfontein lost half of its population, and only about 1000 residents remained, leaving the mainly English speaking community in dismay. For a short while after the withdrawal of Britain, the progress of the town slowed down. However, the British were gradually replaced by other foreigners like the Dutch, Germans, Jews and Afrikaners. At this time the town only consisted of simple single-storey houses with face brick walls and straw roofs, and a few shops that were centred on the market place.