US President George W Bush has complained directly to his Russian counterpart, Vladimir Putin, that Russian companies have been selling military equipment to Iraq in breach of UN sanctions.
Russia remains opposed to the US-led war in Iraq
The White House says it has "credible evidence" that Russian companies had sold military equipment such as satellite-jamming devices, anti-tank missiles and night-vision goggles to Iraq, despite Russian denials.
In a phone conversation with Mr Bush, the Russian president said he would look into the allegations immediately, White House spokesman Ari Fleischer said.
Earlier, Russian Foreign Minister Igor Ivanov denied the claims, saying that relevant agencies had investigated the allegations and found them unwarranted.
"Russia strictly fulfils all its international obligations and has not supplied any equipment, including military, to Iraq in violation of the sanctions regime," he said.
On Sunday the Washington Post newspaper reported, citing sources within the Bush administration, that one Russian company was aiding the Iraqi regime in efforts to jam satellite signals that could guide bombs and military aircraft used by the US-led coalition.
A further two companies, it said, had sold night-vision goggles and anti-tank missiles to the regime in contravention of United Nations sanctions.
Officials within the Bush administration have long been frustrated by Russia's perceived failure to crack down on arms sales to countries the US considers sponsors of terrorism.
However a Russian deputy, Andrei Kokoshin, suggested that Iraq could have obtained Soviet-era weapons through a former Soviet republic such as the Ukraine, Russia's Interfax news agency quoted him as saying.
BBC Washington correspondent Rob Watson says the incident could worsen relations between the two countries, already soured by Russia's continuing opposition to the war in Iraq.