"We are negotiating with all countries about the leaders of this group, since according to international laws this is a terrorist group and no country is authorised to let them in," said government spokesman Abdullah Ramezanzadeh.

"We demand the extradition of the leaders of this group to stand trial," he told reporters.

However, Ramezanzadeh said rank-and-file members would be allowed to return home.

"Taking into account that their bases have been bombed by US forces inflicting heavy losses, we are ready to accept their junior members back home."

On Tuesday, General Richard Myers, chairman of the US Joint Chiefs of Staff, said coalition air forces had bombed Mujahadeen camps in Iraq and that some fighters were expected to surrender soon.

Myers, who did not say when or where the air strikes occurred, said it was too soon to say what effect those actions might have on US relations with Iran.

The group said last week that around 30 of its fighters were killed and more than 40 wounded during clashes which it said were with forces sent over the border with Tehran.

The People's Mujahedeen was instrumental in the overthrow of the shah of Iran in 1979 but was later forced out of the country by the Islamic regime and set up camp in Iraq, where it boasts several bases and thousands of fighters.

In the wake of the September 11, 2001 attacks in the United States the group was tagged a terrorist organisation by Washington and the European Union, an allegation it strongly denies, saying it is a legitimate resistance movement.

The group professed neutrality in the US-led war against Saddam Hussein's regime and has denied assisting it.

SPACE.WIRE