The "Basra-Chalamja connection project" will link the major port city of Basra in southern Iraq to Iran's vast railway network through the Chalamja border crossing, an transport ministry official told AFP.

It is estimated that the project will take "between 18 and 24 months".

The goal is to be able to transport "travellers from the Islamic Republic of Iran and Central Asian countries" to Shiite holy cities, Prime Minister Mohammed Shia al-Sudani said in a speech.

He noted that the project had been under discussion for years before an agreement was reached in 2021.

During Saturday's ceremony, Sudani laid a symbolic foundation stone alongside Iran's first vice-president, Mohammad Mokhber.

Sudani thanked Tehran for planned demining operations at the border to clear the way for the train line and for a railway bridge over the Shatt al-Arab waterway, where the Tigris and Euphrates rivers converge before spilling into the Gulf.

Iraq and Iran fought an eight-year war in the 1980s after Saddam Hussein invaded his neighbour in the wake of Iran's 1979 Islamic revolution.

Mokhber hailed the "strategic" project that he said would be completed "over the next two years", Iranian state media reported him as saying.

Half of the 32 kilometres (20 miles) of rail track planned will be on the Iran side of the border, its official IRNA news agency said.

War-ravaged and beset by rampant corruption, oil-rich Iraq suffers from dilapidated infrastructure, including outdated highways and railways.

Sudani's government has been working on forging a growing number of regional partnerships.

In May, Baghdad unveiled a $17-billion project known as the "Route of Development" for a road and railway stretching 1,200 kilometres (745 miles) from Iraq's northern border with Turkey to the Gulf in the south.

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