TEHRAN -- President Mohammad Khatami here Sunday called for further expansion of bilateral ties between Tehran and Nicosia.

Speaking at a meeting with the visiting Cypriot Foreign Minister George Iacovou, Khatami referred to the strategic historical and geographical position of Cyprus.

He further said that Tehran supports a united Cyprus where Turks and Greeks can live peacefully together.

The president also expressed his hope the two countries can move closer in relations in the near future, IRNA reported.

He stressed that only dialogue and cooperation among nations and governments can guarantee peace and security in the world.

Iacovou, in response, referred to the satisfactory relations between the two states and called for boosting of relations.

He said he appreciated Iran's stance towards developments in the Cyprus issue, and said the government of Nicosia is trying to meet the needs of all its residents in the best possible way.

The Cypriot foreign minister arrived here early Saturday on a two-day visit for bilateral talks.

Iacovou is here on the invitation of his Iranian counterpart and has conferred with his counterpart, Kamal Kharrazi, and Majlis Speaker Mahdi Karrubi over possible ways of bolstering cooperation as well as key developments in the Middle East region.

Karrubi, during his meeting with Iacovou, said that the Palestinian problem can only be solved by allowing the return of Palestinian refugees to their homeland, giving Palestinians the right to decide their own fate and guaranteeing peace in the occupied territories.

He said that Tehran favors a free and independent Iraq with a government representing the interests of all ethnic and religious groups.

He expressed the hope Cyprus would be able to play a more active and leading role in the expansion of relations between Iran and the European Union.

He said Iran is eager to expand cooperation with Cyprus in parliamentary affairs, particularly by and between their parliamentary friendship groups.

Iacovou said he hoped the problems in Iraq would be resolved and a popular government installed there with the UN playing a more active role in this respect.

He said the Cypriot government also hopes a durable solution would be found to the longstanding Middle East problem that would guarantee the interests of the Palestinians.

He gave the assurance Cyprus would remain a reliable friend of Iran and stronger ties with Tehran would be pursued within the framework of the European Union.

The Cypriot official said his country is ready to expand its cooperation with Iran, particularly in various international foray.