The United States has warned Iran against any interference in Iraq, amid claims that Tehran has sent agents there to stir up the Shia population and advance Iranian interests.
There are fears Iran could be drumming up Shia unrest
"We have made clear to Iran that we would oppose any outside interference in Iraq's road to democracy," said White House spokesman Ari Fleischer.
"Infiltration of agents to destabilise the Shia community would clearly fall into that category," he added, although he did not specifically say the reports were true.
Mr Fleischer's comments came as some of the one million Shia pilgrims who have gathered in the central Iraqi city of Karbala staged anti-American protests.
The US and Iran do not have direct diplomatic relations, but Mr Fleischer said Washington had passed the message through "well-known channels of communication" between the two countries.
Earlier, citing US officials, the New York Times reported that Iranian-trained agents had been crossing into southern Iraq to boost support for Shia clerics and an Iranian-style Islamic government.
The unnamed officials alleged that some of the agents were members of the Badr Brigade, the military wing of an Iraqi exile group operating from Iran, and irregular members of a special unit of Iran's Revolutionary Guards.
In other developments:
- A US army commander in Iraq says the fighting there is not over and there are now more American troops in the country than ever
- The first group of UN international aid personnel returns to northern Iraq more than a month after leaving the country
US troops in Baghdad say they expect to have restored electricity to 80% of the capital by Wednesday night
- UK Defence Secretary Geoff Hoon, visiting Iraq, says he thinks Saddam Hussein is probably still in the country
- President Bush says he has no plans for any new military action in the Gulf or elsewhere
- Prominent Iraqi Shia cleric Mohammed al-Fartusi says he was mistreated after allegedly being detained by US forces on his way back to Baghdad from Karbala
- General Jay Garner - the US civil administrator for Iraq - says he wants a new Iraqi administration to be running "very soon"
The pilgrims, who arrived in Karbala from various towns in Iraq, engaged in religious rituals that were banned for a quarter of a century under Saddam Hussein.
The Iraqi Government must be comprised of all elements of the Iraqi community - not one community versus another, not one community over another
This included self-flagellation and the cutting of heads with swords, to mark the death in the 7th century of Imam Hussein, grandson of the Prophet Mohammed.
Mr Fleischer said President George W Bush had been delighted to see the people given a chance to express their religious fervour:
"These reports of the exuberance of the Shia community as they celebrate a holiday that they were previously prohibited from celebrating were greeted by the president with joy," he said.
However, US officials, speaking to the Washington Post, said they had underestimated the strength and organisation of the Iraqi Shia and now feared the rise of anti-American Islamic militancy.
Amid the crowds of pilgrims, groups of marchers carried banners with slogans such as "No to America, no to Israel, yes to Islam" and shouted slogans against a US-imposed government, calling for unity among Shias.
Others chanted "No to Chalabi", referring to Ahmad Chalabi, the US-favoured leader of the Iraqi National Congress (INC), who has returned after decades of exile.
However, the BBC's Damien Grammaticas in Karbala says the anti-US demonstrations were small-scale, involving only a few hundred people.
The US is keen to ensure pluralism in any future Iraqi Government:
"The Iraqi Government must be comprised of all elements of the Iraqi community - not one community versus another, not one community over another. It must be a democratic society and a tolerant society," Mr Fleischer said.
The US meanwhile has agreed a ceasefire with the Iraq-based People's Mujahideen (MKO) - the main armed Iranian opposition group, which was supported by Saddam Hussein's ousted regime.
The group has been declared a terrorist organisation by Iran, the US and the European Union and Tehran has demanded that senior members of the group be extradited to Iran.
But according to reports on the French news agency AFP, a spokesman from the MKO, Mohsen Nadi, said that under the ceasefire agreement the group are going to be allowed keep their arms.