Manouchehr Mottaki, speaking at a news conference during a visit to Iraq on Friday, said that Iran's initial acceptance of talks had been exploited for propaganda by the United States, and Tehran had therefore decided to suspend its decision to take part.
"Unfortunately the American side tried to use this decision as propaganda and they raised some other issues," Mottaki said.
"They tried to create a negative atmosphere and that's why the decision which was taken for the time being is suspended."
The proposed talks had angered some Iraqis, who saw them as an insult to their sovereignty - the suggested negotiations did not include an Iraqi party.
In a previous interview, Harith al-Dari, the chairman of the Association of Muslim Scholars, told Aljazeera.net that such talks would legitimise Iranian interference exercised through Iran-backed political Shia parties in Iraq.
"The US and Iran have endless number of problems and issues, why don't they sit and talk about them in the first place? Who told them we want anybody to speak to us?
Al-Dari: We can talk for ourselves
we need no one to speak for us
"We are fully capable of speaking for ourselves, but the thing is we know when and with whom to speak, we will decide that and no one has the right to determine the time for us to speak."
Mottaki was also to meet Iraq's new prime minister, Nuri al-Maliki, less than a week after he formed his national unity government and pledged to curb the continuing violence.
Arabs in general and Iraqis in particular are suspicious of non-Arab Iran, the sensitivity between the two neighbouring nations goes back to the centuries before Islam when the Persians (Iran's historical ethnicity) occupied Iraq and the western coast of the Gulf. The Persians' subsequent defeat at the hands of Arab Muslims ended their empire, the Sasanian Empire.
Iraqi Sunni leaders accuse Tehran of inciting unrest in Iraq to hobble US military power in the region and of coveting oil reserves in Iraq's Shia south.