Iran has denied allegations that it is running an espionage ring in Kuwait.

The denial follows a report in Kuwait's Al Qabas newspaper that Kuwaiti security services had "dismantled a spy cell" run by Tehran.

Seven people were arrested in connection with the cell, which was allegedly monitoring US and Kuwaiti military bases, Al Qabas reported.

The paper cited anonymous security sources, who claimed they found communications devices and more than $250,000 in the home of one of the alleged cell's leaders.

The Iranian government denied that it was spying in Kuwait.

"The claim discussed by some media on discovering a spy cell in Kuwait seeks undermining bilateral ties," the Iranian embassy in Kuwait said in a statement.

"The Iranian and Kuwaiti nations should be vigilant and not be trapped by these tricks."

Ramin Mehmanparast, a spokesman for Iran's foreign ministry, called the reports a "fabrication" in an interview with the Iranian television station Al Alam.

And an official from the Iranian Revolutionary Guards said the espionage reports were aimed at creating a "phobia" about the organisation.

Tough action calls

Mohammed Hayef, a Salafist member of Kuwait's parliament, urged the government to expel the Iranian ambassador and withdraw its own envoy from Kuwait.

Hayef threatened to call a special session of parliament to debate the alleged spy cell.

Shuaib al-Muwaizri, an independent MP, also called for the Iranian ambassador's expulsion.

"We hope that the government releases a statement on the issue and if it is true, the government must act decisively by asking the Iranian ambassador to leave Kuwait," Muwaizri said.

A Kuwaiti government spokesman said today that the government was investigating the case, but didn't mention Iran or provide any details of the investigation.

"Security agencies investigate whatever information they receive, including what has been reported lately," said Mohammed al-Baseeri, the spokesman.

Baseeri called the Al Qabas report "inaccurate."