"The decision taken by the (Iraqi) Governing Council is very positive. We have been saying to the fighters not to be stubborn and to surrender, in which case we will show leniency," Intelligence Minister Ali Yunessi told reporters.

When asked if Iran could now hand over top members of al-Qaeda it says are in its custody, Yunessi said "there is no link".

"When it comes to terrorists, we do not do deals," added government spokesman Abdollah Ramazanzadeh.

"The judiciary will decide on what to do with them if they have not committed crimes against Iranians and if there are no Iranian complaints against them," he added, repeating statements that some detained al-Qaeda members here could be tried in Iranian courts.

Several Western diplomats have said Iran has been resisting handing over top-ranking al-Qaeda fugitives, complaining that the United States had failed to deal with the People's Mujahedeen after the invasion of Iraq.

"We have very good relations with the Governing Council, and we have had discussions (on the People's Mujahedeen) and this decision is the result," added Vice President Mohammed Ali Abtahi.

Iraq's interim Governing Council decided unanimously Tuesday to expel several thousand members of the People's Mujahedeen, branding the Iranian opposition force a "terrorist organisation".

The statement did not say where the people would be sent when they are expelled, but that its offices would be closed and its arms and financial resources confiscated.

The money would "be given to the compensation fund for victims of the former fascist regime" of Saddam Huusein.