Iran has accused the US of kidnapping five of its citizens who were arrested in the northern Iraqi city of Irbil.
The US has denied the men were diplomats - it says they were linked to Iran's Revolutionary Guard and were arming Shia fighters in Iraq.
Iran's ambassador to Iraq called last week's arrests "an insult to the Iraqi people". He urged the US to prove that they were helping Iraqi militants.
Hassan Kazimi Qomi denied Iran has been involved in the violence in Iraq.
He said the "kidnapped" men were diplomats engaged in legitimate tasks.
"These actions are against international conventions which guarantee diplomatic immunity and they are also against the framework of the agreement between Iraq and the Islamic Republic of Iran," Mr Qomi told the BBC's Andrew North in Baghdad.
He denied Iran had any interest in destabilising Iraq, saying the unrest and a flood of refugees could spill over Iran's border.
Diplomatic row
Mr Qomi's comments follow a similar statement made to the BBC on Wednesday by one of Iraq's most powerful Shia politicians, Abdel Aziz al-Hakim, who condemned the arrests as an attack on Iraq's sovereignty.
The five men were detained - along with one other who has now been released - at the Iranian liaison office in Irbil, in the northern, Kurdish part of Iraq.
Iran said the building was a consulate, but the US disagreed, saying it had no official diplomatic immunity, and nor did the men.
"This undoubtedly signals a ratcheting up of pressure on the Iranians" US flexes muscles
Mr Qomi said it was not the first such incident targeting Iranians in Iraq.
Late last year, US troops descended on Mr Hakim's residential compound in Baghdad and detained two Iranian officials. They were later released.
He said other diplomatic staff and Iranian businessmen had been detained in the past.
Washington has often accused Iran, or factions within the Iranian government, of aiding Shia groups in Iraq militarily and politically.
US Vice-President Dick Cheney said on Sunday that Iran was "fishing in troubled waters" by aiding attacks on US forces and backing Shia militias involved in sectarian violence.
President George W Bush has accused Iran of destabilising Iraq and warned that the US would make a tough response.
Tehran denies the claims and has demanded to see proof.
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