Iran has denied reports in the US that Iraqi politician Ahmed Chalabi warned Tehran that Washington had broken its secret communications codes.
Chalabi strongly denies passing US secrets to Iran
"The whole story is completely false," said Supreme National Security Council secretary Hassan Rowhani.
The FBI has reportedly begun an inquiry to see who passed information to Mr Chalabi and if it damaged US security.
Officials said the alleged leak helped cause a parting of ways between the US and its former favourite Iraqi leader.
According to US officials, Mr Chalabi told Iran's chief spy in Baghdad in April that the US was reading the Iranian intelligence service's communications traffic.
US intelligence is said to have discovered the alleged betrayal when it read a cable which the station chief sent to his superiors in Iran detailing the conversation with Mr Chalabi.
Mr Rowhani acknowledged Iran had been in touch with Mr Chalabi when he had been an exiled opposition leader, but denied at any time having an intelligence relationship.
It is a campaign to marginalise our role because
we have been demanding full sovereignty from the US-led coalition
Iraqi National Congress party official
"Chalabi was mostly in America. Sometimes, we met him at conferences, for example in London or northern Iraq. Iran had no special intelligence contacts or activities with Chalabi and we don't have now," Mr Rowhani said.
He also scoffed at the report that the US had intercepted a cable to Tehran.
"Between Iran and Iraq is an open border. To get a document is easy and there is no need to message it on the telex so that the United States may intercept it. The story is wrong from its foundation," Mr Rowhani said.
Much has changed since last year, when Mr Chalabi was one of the first Iraqi exiles to be flown back into Iraq following the US-led invasion.
He became increasingly distanced from Washington after criticising the US-led coalition and that allegations that he was linked to Iranian hardliners.
The US has since questioned the quality of intelligence provided by his party, the Iraqi National Congress, in the run-up to the invasion.
The Pentagon had been paying Mr Chalabi's party $335,000 a month as part of an intelligence-gathering programme, but cut off funding last month.
A few days later, American and Iraqi forces raided his home and offices, seizing documents and computers.
The New York Times says it knew of the allegation against Mr Chalabi for some time, but was asked by the Bush administration to withhold publication in order to avoid compromising a vital intelligence operation.
That request was withdrawn on Tuesday, says the paper. Mr Chalabi has strenuously denied passing any classified information to Iran.
An official at his Iraqi National Congress party said the report was "fabricated" and part of "a campaign to marginalise our role because we have been demanding full sovereignty from the US-led coalition".