A member of the Iraqi Governing Council, Samir Sumaidy, said Russia made the proposal at a meeting between President Vladimir Putin and the head of the US-backed Iraqi Governing Council Abd al-Aziz al-Hakim at the Kremlin on Monday.
"Putin has made an offer of Russia exempting Iraq from 65% of their debts. That is a decision made by Russia to be confirmed within the Paris Club," Sumaidy told reporters after attending the meeting.
Hakim met Putin after a tour of West European countries devoted to reconstruction and efforts to cut Iraq's debt burden after the US-led invasion that ousted President Saddam Hussein.
Despite Russia's offer, sources close to the Paris Club of creditors said nothing had been discussed concerning potential write-off levels as far as the group was concerned as a whole, and suggested no such offer would be coming any time soon.
"There's never been any discussion on (write-off) figures - the in-depth analysis of the situation still has to be completed," one source said.
"There's never been any discussion on (write-off) figures - the in-depth analysis of the situation still has to be completed"
Hakim told Putin that Russia, as a permanent member of the UN Security Council, could help ensure the world body's role in postwar Iraq and help speed the transfer of power to Iraqis.
Putin said Moscow wanted to pursue longstanding relations with Baghdad regardless of the abrupt change of authority.
Russia is one of Iraq's biggest creditors and is owed $8 billion in principal and interest, according to the Paris Club, a group of 19 creditor nations, which negotiates debt.
Energy Minister Igor Yusufov said after the Kremlin meeting that talks would soon resume on outstanding Russian contracts.
Most notable is the Russian oil company LUKOIL's $3.7-billion contract for the huge West Qurna oilfield. The deal was signed in 1997, but Saddam's government scrapped it, saying LUKOIL had completed no work and had been seeking US guarantees to keep the field should a new government come to power.
LUKOIL insists the deal is still valid, a position supported by Russian authorities.