"There are no Iraqi prisoners in Iran any more and the demand by the kidnappers as well as their nature is rather suspicious," the student news agency ISNA quoted Foreign Ministry Spokesman Hamid-Reza Assefi as saying.

Jahani's captors, calling themselves the Islamic Army of Iraq, demanded on Saturday, via the Iranian satellite channel Al-Alam, the release within two days of 500 prisoners allegedly detained in Iran since the 1980-88 Iran-Iraq war.

"The files of the prisoners of war were closed a long time ago and the only issue remaining is that of those missing in action," Assefi said.

He said Iran was holding the Iraqi interim government responsible for Jahani's safety and called on Baghdad to do whatever possible to release him.

Accusations

State-news agency IRNA quoted an unnamed Iranian source as alleging that the group had acted in collaboration with the United States Embassy in Iraq under direct supervision of US Ambassador John Negroponte.

Ayatollah Ahmad Jannati, head of Iran's senate-like Guardian Council, on Friday accused US appointed Iraqi officials of having abducted the Iranian diplomat.

Jahani, an employee of the Iranian consulate in Iraq, was seized while driving from Baghdad to Karbala last Wednesday.