But as he arrived, Iran angrily dismissed suggestions that Afghanistan might play a mediating role in Tehran's standoff with the West over its nuclear programme.

Karzai, accompanied by senior members of his government, met Iran's President Mahmoud Ahmadinejad and will also see the country's supreme leader Ali Khamenei and other officials, his office said.

"We must develop relations in every field," Ahmadinejad said as he welcomed Karzai.

He also expressed the wish that Afghans living in Iran return home "to put their experience to the service of Afghanistan".

About a million Afghans live in Iran, working mainly in construction and agriculture.

Karzai said that since the fall of the Taliban, "relations between the two countries have developed greatly, and our Iranian brothers have played an active and important role in the economic and political reconstruction of Afghanistan".

The Afghan people will "never forget the help provided by Iran", Karzai added.

"Iranian exports to Afghanistan have risen from several million dollars four years ago to 500 million dollars today," he said.

While in Tehran, Karzai is expected to sign several agreements, including on the exchange of prisoners, investment and a cross-border rail link between Khaf and Herat.

Afghan presidential spokesman Karim Rahimi had said in Kabul on May 14 that Afghanistan was ready to mediate in the growing dispute between the US, one of Kabul's key backers, and Iran over Tehran's programme of uranium enrichment.

But Iranian foreign ministry spokesman Hamid Reza Asefi told the official IRNA news agency: "We say these reports are baseless, and such a matter is not on the agenda of discussions with Mr Karzai."

Afghanistan has good ties with Iran, which took in around two million Afghan refugees during the country's 25 years of war, and has said it wants to deepen this relationship.

The country also has a close relationship with the US. There are about 22,000 US troops in Afghanistan, helping to battle a mounting insurgency launched by the Taliban after it was removed from government in a US-led campaign in 2001.

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