UAE Foreign Minister Bin Abdullah al-Nuaimi accused Iran of consolidating its presence on the islands by conducting military exercises in the area.

The UAE intends to raise the issue at the Arab League foreign ministers' summit in Cairo on Sunday, he said.

(Click here for a map of the disputed islands)

The accusation came at the meeting of foreign ministers of the six-member Gulf Co-operation Council (GCC) in Jeddah, Saudi Arabia, which is being chaired by the Emirates minister.

The islands, Greater and Lesser Tumb and Abu Musa, have been under full Iranian control since 1992 and the UAE believes Iran has effectively annexed the islands, ignoring the Emirates' claims.

The Saudi Press Agency reported that Mr al-Nuaimi reiterated his call to Iran not to turn down the peace offer aimed at achieving concord and improving relations of friendship and good neighbourliness.

War games

Last week, Iran announced it was preparing to conduct joint naval exercises with the UAE's neighbour and fellow GCC-member, Oman, which has long maintained good relations with Iran despite the islands dispute.

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Oman quickly denied the announcement, but the BBC correspondent in the Gulf, Frank Gardner, says this development would have alarmed the UAE.

The issue of the disputed islands has stood in the way of the progress of Iran-Gulf relations since the election of Iranian President Muhammad Khatami in 1997.

Mr Khatami has tried to forge closer diplomatic and economic links with the Gulf states since his election including making a landmark visit to Saudi Arabia in May this year.

But in June, the Emirates threatened to leave the GCC unless the other states (Saudi Arabia, Kuwait, Bahrain, Qatar and Oman) tied progress in relations with Iran to a solution to the islands dispute.

The UAE is pressing for a timetable for negotiations, and has offered to allow the International Court at the Hague to settle the dispute.

Iran, however, has made it clear it does not welcome intervention by any outside body.