"We have picked up individuals who we believe are giving very sophisticated explosive technology to Shia insurgent groups who then use that technology to target and kill American soldiers," said Undersecretary of State Nicholas Burns.

"It's a very serious situation. And the message from the United States is, Iran should cease and desist."

The United States has been tracking Iranian involvement in Iraqi insurgent attacks for about two years and has found increasing evidence that Iran has given assistance to Shia in Southern Iraq, Burns said in an interview with NPR taped for broadcast on Thursday.

"They have attacked British soldiers near Basra and they've now begun to mount those operations throughout the country - at least in the Baghdad region as well," Burns said.

Washington officials have charged that Iran is providing Shias with high-grade explosives capable of tearing through the armour on military vehicles.

The Bush administration has repeatedly warned Iran against fuelling violence in Iraq and US forces have detained a number of Iranian officials in raids over the past month.

"We warned Iran privately on a number of occasions over the last year and a half and the Iranians, of course, did not appear to listen to that, so now we've begun to detain those Iranian officials," Burns said in the interview.

"We think it's absolutely within our rights to do so under Article 51 of the UN charter, which is self-defence."

Washington accuses Tehran of undermining efforts to stabilize Iraq and of pursuing nuclear weapons. Iran says its nuclear ambitions are for generating electricity.

President Bush said in an interview that the conflict over Iran's nuclear ambitions can be resolved peacefully. But he repeated a vow the United States would respond firmly if Iran stirs up violence in Iraq.

"I'm also concerned about Iranian influence into Iraq and have made it clear to the Iranians that if we catch them moving weapons they'll be dealt with," Bush told the Wall Street Journal in an interview posted on its Web site on Wednesday.

Bush's tough comments have revived speculation in Washington about a possible US attack on Iran.

Meanwhile, Iran yesterday kicked off a series of anniversary festivities for the Islamic revolution by shrugging off UN sanctions over its nuclear programme and urging national unity against US "conspiracies".

Iranian officials have promised a major announcement of progress in its controversial programme during the 10-day celebration, but leaders first focused on emphasising Iran's defiance in the nuclear standoff and its position of strength.