There are fears that Iraq may be next to face US strikes
Iraq has accused the United States of state terrorism amid signs that the war of words between the two countries is heating up.
In a report submitted to a United Nations committee which is examining the strength of counter-terrorism legislation around the world, Iraq declared that it was one of the foremost victims of terrorism.
The report said that the US was spending tens of millions of dollars on troops and mercenaries to carry out terrorist operations against Iraq.
US officials have dismissed the accusations.
Baghdad says that America's role as one of the leading supporters of state terrorism is enshrined in legislation known as the Iraq Liberation Act.
This was passed by the US Congress during former President Bill Clinton's administration.
These comments have been swiftly dismissed by American officials who have described them as the usual propaganda coming from Baghdad.
Rising tensions
But the accusations and counter-accusations will do nothing to reduce tension between these two countries.
President Bush recently said Iraq was part of an "axis of evil", comprising nations that were developing weapons of mass destruction and posed a threat to the international community.
There is much speculation that Iraq may be the next military target for the Bush administration.
Any provocation from Baghdad is only likely to increase political support in the US for military intervention.