Possible Iran links to Iraq bomb - Blair

British Prime Minister Tony Blair said yesterday that evidence pointed to Iran or its Lebanese Hizbollah allies as the source of sophisticated explosives used in roadside bombs in Iraq, although Britain did not have proof.

The accusations, first made by a senior British official in an anonymous briefing on Wednesday, have added to tensions between Britain and Iran at a time when London and Washington are seeking UN action over Iranian nuclear programmes.

The British official said London believed that Iran and Hizbollah had provided deadly armour-piercing explosives and infra-red devices used to kill British soldiers in Iraq. Tehran denies it helps militants in Iraq.

"This is a lie," Iranian Foreign Ministry spokesman Hamid Reza Asefi told state television. "The British are the cause of instability and crisis in Iraq," he said, adding that it was in Iran's interests to have a stable neighbour.

Hizbollah also rejected any link to the bombs. "The British accusations that the party is the source of the explosives that have targeted the British occupation are lies," the group said in a statement issued in Beirut.

Mr Blair said the accusations were not proven but were worrying. He also said they may have been an attempt by Iran to intimidate Britain over its tough stance in nuclear talks.

"What is clear is that there have been new explosive devices used not just against British forces but elsewhere in Iraq. The particular nature of those devices leads us either to Iranian elements or to Hizbollah," Mr Blair told a news conference after meeting Iraq's President Jalal Talabani.

"However we cannot be certain of this at the present time."

Mr Talabani, who is a Kurd, said the Iraqi government would investigate the charges. However, Iraqi Prime Minister Ibrahim Jaafari, a Shi'ite Muslim, rejected accusations from other countries that Shi'ite Iran was interfering in Iraq. Saudi Arabia, as well as Britain and the US, have made such charges.

"Such accusations are baseless and we do not agree with them at all," Mr Jaafari told Iranian state television. "Relations between Iran and Iraq are currently very friendly and strong and expanding. We are proud of the situation. "Some people want to harm our existing friendly relations with Iran. But we will not let them do so," he said.

Eight British soldiers have been killed by roadside bombs since May. Both British and US commanders say recent attacks in Iraq have used "shaped charges" with greater killing power and that this may have required outside expertise.

The Iranian- and Syrian-backed Shi'ite group Hizbollah has used similar devices against Israeli soldiers in Lebanon, the British official said, prompting suspicion of an Iranian link.