The Liberian Government has rejected reports that it created and still controls two Ivory Coast rebel groups.
Taylor has admitted buying weapons despite a UN arms embargo
"It's impossible... we are not involved," said a spokesman for President Charles Taylor.
Earlier this week, UK-based campaign group Global Witness released a report, accusing Liberian President Charles Taylor of being behind the Mpigo and MJP groups which emerged in western Ivory Coast after the conflict began.
Global Witness said the Liberian logging industry was being used to fund illegal weapons purchases.
"The Liberian Government is still actively involved in the illegal arms trade, and is the driving force behind the training, arming and deployment of the Ivorian rebel groups Mpigo and MJP, with Liberian President Charles Taylor calling the shots from Monrovia," said Alice Blondel, Global Witness campaigner.
Global Witness also accused Liberia of planning to destabilise neighbouring Sierra Leone, where he backed a rebel group in the 1990s.
The group says that Liberian assets worth $3.8bn are being held in Swiss bank accounts - more than held by Africa's giants Nigeria and South Africa.
Thousands have fled the fighting
Mr Taylor's spokesman Vaani Paasewe said the release of the report was timed to discredit the government because the United Nations is due to reconsider its sanctions on Liberia later this month.
He accepted that some of those fighting in Ivory Coast may be Liberians but said they had not been sent by the government.
Mr Taylor recently admitted using funds from the logging industry to fund weapons purchases despite the UN arms ban.
This admission and recent fighting have led neighbouring Guinea to increase its security in the border area.
Liberia accuses Guinea of backing the Liberians United for Reconciliation and Democracy (Lurd) rebels - a charge it denies.
Some 14,000 people have recently crossed into Guinea to escape fighting, while Lurd fighters last week advanced to within 15 km of Monrovia.
Despite the insecurity, Mr Taylor told the BBC's Focus on Africa programme that elections would be held in October "at all costs".