By Gulf Correspondent Frank Gardner

The five-day exercise, code-named "Vahdat" or Unity 77, began on Monday and spans an area from the central Gulf out into the Sea of Oman.

Amphibious operations, chemical warfare and mock attacks on ships by divers using limpet mines are just some of the skills being practised in Iranian waters this week, according to Iran state radio.

The manoeuvres began with a naval exercise codenamed "Shahamat", meaning courage, which tested Iran's ability to land troops from the sea.

A commander in Iran's Islamic Revolutionary Guards Corps, Isa Galverdi, was quoted by the official Iranian news agency, Irna, as saying the manoeuvres involved a 160 warships and 120 aircraft.

Such exercises have been viewed in the past with suspicion by both the US Navy and by Iran's Gulf Arab neighbours.

But this week Iran announced that military observers from Oman will attend the war games following a bilateral defence agreement signed in November.

Co-operation amongst the Islamic countries of the Gulf is a theme which Iran has been recently promoting.

A senior Iranian naval officer, Ali Akbar Ahmadian, was quoted as saying the aim of Vahdat 77 is to create mutual understanding among regional countries.

During the time of the Shah in the 1970s, Iran was acknowledged as the guarantor of security in the Gulf.

But revolution and eight years of war with Iraq saw Iran's military might largely replaced by the US Navy, which currently has 15 warships in the region.