"President Karzai will visit Iran for three days and hold talks with top Iranian officials aimed at boosting bilateral relations, and follow up on a previous agreement on reconstruction projects," he said, under condition of anonymity.

Karzai, who on Tuesday was holding talks in Abu Dhabi on reconstruction aid for his war-battered country, would also meet with Iran's supreme leader, Ayatollah Ali Khamenei.

Afghan presidential spokesman Karim Rahimi was quoted last week as saying that during the visit Karzai would offer to mediate between the United States and Iran over Tehran's controversial nuclear program.

The United States is leading international pressure to force Iran to halt its program of uranium enrichment.

The current US ambassador to Iraq, Zalmay Khalilzad, served previously in Kabul and knows Karzai well. His responsibilities in Baghdad include relations with Iran, although there have been no US-Iran relations for 26 years.

But the Iranian source downplayed reports of a mediation. "I do not have any information about such reports and I see it very unlikely," he said.

Despite tensions between the neighboring states, Kabul and Tehran maintain good relations. Karzai's talks will also focus on Afghan migrants living in Iran, the source added.

Iran has hosted a large Afghan community for the past quarter of a century.

Three months ago, it launched a new crackdown on Afghan nationals living illegally in the Islamic republic amid persistent problems in sending back registered Afghan refugees.

According to official Iranian figures, some 315,000 Afghan immigrants were arrested and repatriated over the past year, and 914,000 Afghans are still in Iran with refugee papers.