Assistant Secretary of State Richard Hill, the US envoy on North Korea, told a Congressional hearing it "is our understanding" that one or more Iranian officials were present at the July 5 test launches, which prompted a UN Security Council resolution barring countries from trading missile-related technologies and equipment with the North.

But Hill also offered an olive branch to North Korea by stressing that Washington is not out to topple President Kim Jong-Il and is still willing to hold contacts with his isolated regime.

Thursday's charges against Iran came amid a tense diplomatic tussle over how to convince Tehran to halt its uranium enrichment program that Washington fears is being used to create nuclear weapons.

They sparked wide interest at the Congressional hearing, coming against the backdrop of fast-escalating violence between Israel and Lebanon's Hezbollah militia that Washington accuses Iran of helping foment.

Iran's presence in the North was raised by Republican Senator George Allen, who asked Hill whether it was not "a great concern" that Tehran has military ties with Pyongyang.

"That is correct," Hill replied. "Clearly, North Korea has interest in commercializing this technology," he said, referring to its missile development.

Allen pressed Hill about reports that Syria, Venezuela and Myanmar were also involved in arms-related trade with North Korea.

"We have certainly tracked that, and we know that they have been engaged in these types of talks," Hill said.

Iran and North Korea are the two survivors -- the other being Iraq -- of the "axis of evil" denounced by US President George W. Bush in 2002.

North Korea is believed to have sold missile technology in the past to Iran, according to diplomats, but whether there was further cooperation remains unclear.

Iran's presence during the launches was first reported in Japan's Sankei Shimbun daily but has not been confirmed by either Iran or the North.

Pyongyang responded immediately and angrily to the July 15 United Nations sanctions and threatened to conducted new missile tests.

Japan and South Korea have said they will try to use next week's ASEAN regional security forum in Malaysia to push for North Korea's return to six-nation talks aimed at dismantling its nuclear arms.

Hill said Thursday that Washington remained committed to the multiparty format.

"We are not seeking regime change. We are seeking a change in this regime's behavior," he told the US Senate's Foreign Relations Committee.

"We have the regime that we have, and we have to deal with them ... We don't have the option of walking away from this problem."

The diplomat added however that "the United States, one way or the other, is not going to accept a North Korea with weapons of mass destruction."

Some Congressional critics at the hearing accused the Bush administration or being too "passive" in its dealings with Pyongyang.

"Our policy toward North Korea has been dormant for too long," said Democratic Senator Russ Feingold.

"We have been waiting on the sidelines hoping almost passively that conditions will turn our way. We have been distracted by Iraq -- so much so, that it took North Korea's launch of seven missiles before we got fully engaged again," said Feingold.

North Korea should be at or near the top of the foreign policy agenda," the senator said.

North Korea has shunned the six-way talks since November to protest US financial sanctions on a Macau bank accused of money laundering on its behalf.