Iran has dismissed any suggestion that it might be interfering in post-war Iraq following a warning by the United States.
The Americans are nervous about the role of Iran
Foreign Minister Kamal Kharrazi declared Tehran was not seeking to push the political role of fellow majority Shia Muslims in Iraq at the expense of any other community.
On Wednesday, the US urged its arch-enemy not to interfere in Iraq, amid claims that Tehran had sent agents to stir up the Shia population and advance Iranian interests.
The warning came as some of the one million Shia pilgrims who flocked to the holy central city of Karbala staged anti-US protests.
It is very interesting that Americans have occupied Iraq and are now accusing its neighbour of interfering in that country
Iranian Foreign Minister
Correspondents say there are fears - among some US officials as well as some Iraqis - that Shia dominance in Iraq's post-war politics could lead to an Islamic theocracy there like the one in neighbouring Iran.
Relations between Iran and the US have long been strained, and Tehran was named by President George W Bush as part of the "axis of evil".
"It is very interesting that Americans have occupied Iraq and are now accusing its neighbour of interfering in that country," Mr Kharrazi told a news conference after talks in Tehran with visiting French Foreign Minister Dominique de Villepin.
Mr Kharrazi said Iran's clerical leaders had been using their pull with Iraqi Shias to encourage people to "put aside violence... and move towards forming a democratic and free government."
"This does not mean interference," he said.
On Wednesday, White House spokesman Ari Fleischer said Washington had made it clear in a message to Tehran that it "would oppose any outside interference in Iraq's road to democracy."
"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.
Iran is worried about a US "deal" with guerrilla fighters based in Iraq
According to US officials quoted in the New York Times, Iranian-trained agents have been crossing into southern Iraq to boost support for Shia clerics and an Iranian-style Islamic government. However Mr Kharrazi said the claims were "baseless".
US forces have now started border patrols, aiming to screen people trying to enter and leave Iraq through Iran.
The US - which has no direct diplomatic ties with Iran - is seeking to set up a broad-based, democratic government in Iraq, with Shia, Sunnis, and Kurds and other minorities represented.
"Naturally the majority of Iraq is Shia but we are not insisting on [the role of the] Shias," Mr Kharrazi said.
"For us Shia, Sunnis, Turks and Arabs are the same and everybody should play their role in a democratic Iraq."
However some US officials have been quoted as saying they had underestimated the strength and organisation of Iraq's Shias - who make up about 60% of the population - and now feared the rise of anti-American Islamic militancy.
Iran's foreign minister also voiced concern about a reported ceasefire between the US and an Iranian opposition group, the People's Mujahideen (MKO) which is based in Iraq and was supported by Saddam Hussein.
The group - a militia that has been striving to overthrow Iran's Islamic government for two decades - has been declared a terrorist organisation by Iran, the US and the European Union and Tehran has demanded the extradition of senior members.
Mr Kharrazi said that if reports that they are being allowed to stay and keep their weapons were true "this will expose the Americans' plans for the region and it would be contrary to international law. "