By 1861, much of the Papal States' territory had been conquered by the Kingdom of Italy. Only Lazio, including Rome, remained under the pope's temporal control. In 1870, the pope lost Lazio and Rome and had no physical territory at all, except the Basilica of St Peter and the papal residence and related buildings around the Vatican quarter of Rome, which the new Italian state did not occupy militarily, despite annexation of Lazio. In 1929 the Italian Fascist leader Benito Mussolini, the head of the Italian government, ended the "Prisoner in the Vatican" problem involving unified Italy and the Holy See by negotiating the Lateran Treaty, signed by the two parties. This recognized the sovereignty of the Holy See over a newly created international territorial entity, a city state within Rome limited to a token territory which became the Vatican City.