Iran President Khatami faces
According to the allegations, by a US-based Iranian exile group, the weapons were being manufactured at the Imam Hussein and Malek Ashtar Universities.
Iran is armed with anthrax, smallpox and typhoid and is ready to use them, Ali Riza Jafarzadeh, a spokesman for the group in the US, said.
The group, calling itself the National Council of Resistance of Iran, did not provide any evidence to back its claims saying that its information came from sources within the Tehran government.
"I strongly deny that we have biological weapons because we do not need any banned weapons," a senior Iranian official, who asked not to be named, told Reuters.
Soona Samsami, another US-based representative of the group, said Iran's Ministries of Defence and Intelligence and Security were involved in the biological weapons programme, which dates back to 1985 during the country's war with Iraq.
She accused Russia, China, North Korea and India of helping Tehran develop the programme which includes aflatoxins, plague and cholera bacteria.
The exiled group had earlier alleged Iran had a uranium enrichment facility. The US claims this is part of Iran’s nuclear weapons programme, an allegation that is under investigation by the United Nations Atomic Energy Agency.
The National Council of Resistance is the political wing of the Mujahideen-e-Khalq (MEK), an armed opposition group which is seeking to replace the Islamic government in Iran with one that blends Marxist and Islamic ideas.
The MEK is considered a terrorist organisation by Washington but its political arm is allowed to maintain offices in the US.
Reacting to the latest allegations, White House spokesman Scott McClellan said on Thursday the administration had "long made clear" its concern over Iran's weapons.
"Some of those materials may have legitimate uses, but we are concerned that they're seeking them for a biological weapons programme," he told reporters.