"The Quds Force provided aid in the form of weapons, training and funding to Hamas and other Palestinian terrorist groups, Lebanese Hezbollah, Iraq-based militants and Taliban fighters in Afghanistan."

Manuchehr Mottaki, the Iranian foreign minister, said: "The US, for all it has done in Abu Ghraib and Guantanamo jails, doesn't have the authority nor the capacity to give opinions or accusations about other countries."

The report is released annually and the US law requires the secretary of state to make it available to congress by April.

Critical support

It lists countries that provide critical support to non-state "terrorist" groups, and says that without state sponsors, so-called terror groups would not secure funds and weapons.

The report said Iran had continued to be a major supporter of groups that are "implacably opposed" to the Middle East peace process between Israel and the Palestinians.

"Iran provided weapons, training and funding to Hamas and other Palestinian terrorist groups, including Palestine Islamic Jihad (PIJ) and the Popular Front for the Liberation of Palestine-General Command (PFLP-GC)," the report said.

"Iran's provision of training, weapons and money to Hamas since the 2006 Palestinian elections has bolstered the group's ability to strike Israel.

The report said Iran backs
violent groups within Iraq [AFP]
"In 2008, Iran provided more than $200m in funding to Lebanese Hezbollah and trained over 3,000 Hezbollah fighters at camps in Iran.

"Since the end of the 2006 Israeli-Hezbollah conflict, Iran has assisted Hezbollah in rearming, in violation of UN Security Council resolution 1701."

Todd Kent, political science professor at Texas A&M University in Qatar, told Al Jazeera that by putting Iran on the list, the US "keeps in place certain prohibitions against US business and the government selling certain products to Iran".

He said: "It is a legal manouevre to say that we haven't really seen the substantive changes that we would expect... They are saying the status quo remains. It is part political, part legal."

Kent said there had been overtures from both sides, but the US was not going to allow certain exports to Iran, especially arms exports and US financial assistance.

The report said that despite Tehran's pledge to stabilise Iraq, the Iranian authorities continued to provide lethal support, including weapons, to Iraqi groups targeting US-led and Iraqi forces.

Washington's new administration has been trying to engage Iran with a view to restoring diplomatic ties cut 30 years ago.

'Co-operative partner'

But major issues, including Iran's attempts to build what the US calls a nuclear bomb, still stand in the way. Iran maintains its nuclear enrichment is meant for civilian use.

The report also criticised Cuba, saying that though it no longer "actively supports" armed struggles in Latin America, it continued to provide havens to several "terrorists", including Eta and the Revolutionary Armed Forces of Colombia (Farc).

Bruno Rodriguez, Cuba's foreign minister, said: "Frankly, I believe no one pays attention or reads those documents. People know the author of those documents is an international delinquent."

Sudan remained a co-operative partner in global counter terrorism efforts, the report said.

Syria was criticised for its "public support" for the Palestinian groups, which the report said varies, depending on Syrian national interest and international pressure.

"President Bashar al-Assad continued to express public support for Palestinian terrorist groups. Hamas' politburo head and de facto leader Khalid Meshaal and his deputies continued to reside in Syria," the report said.