Ian Black

London: Washington and Tehran are poised for their highest-level talks for years later this week, following Iran's agreement to attend a key international conference on the future of Iraq.

U.S. Secretary of State Condoleezza Rice is expected to meet Iranian Foreign Minister Manuchehr Mottaki at Sharm al-Sheikh on Friday.

Iraqi Foreign Minister Hoshyar Zebari said U.S.-Iranian talks were now ``highly likely''.

However, Ms Rice was cautious, saying she would ``not rule out'' an encounter.

The talks mark a significant moment in the relationship between the U.S. and Iran, which has been characterised by mutual hostility since the 1979 overthrow of the Shah and is tainted still by American ``axis of evil'' rhetoric, by Iranian talk of a ``Great Satan'' and by the issue of Tehran's nuclear ambitions.

Until Sunday, Iran had not confirmed its participation in the meeting at the Red Sea resort.

All of Iraq's neighbours as well as the five permanent U.N. Security Council members have agreed to attend. Syria, Iran's only Arab ally, will also be present.

© Guardian Newspapers Limited 2006