LONDON -- Prime Minister Tony Blair's official spokesman confirmed Thursday that that there is a wide gap between the UK and the U.S. over its policy towards Iran.

There is a vast difference between the behavior of Iran and Iraq, the spokesman said in answering why Blair was prepared to join military action against one of President Bush's 'axis of evil,' while at the same time meet Iranian Foreign Minister Kamal Kharrazi.

He told domestic and foreign journalists at the prime minister's daily briefing that Iran had not been pursuing an arsenal of weapons of mass destruction and had not defied any UN resolution.

His comments followed Blair holding 30-minutes of talks with Kharrazi that focused on the impending U.S.-led war against Iraq and on other bilateral issues.

The talks were seen as a signal that the British premier was prepared to differ with the U.S. as well as underline the importance attached by Blair to Iran's position on the launch of military action to overthrow the regime of Saddam Hussein.

With the world bracing for a showdown between U.S. and Iraq, Blair told Kharrazi on Thursday that regular exchange of views between Tehran and London in the coming weeks was very vital.

The British premier sent his greetings for President Mohammad Khatami and hoped to meet him in the future. He also stressed London's policy to maintain constructive dialogue with the Islamic Republic according to mutual respect and boost relations with it.

Blair described the situation in the Middle East critical, saying time was running out for Iraqi leader Saddam Hussein and that "Saddam's link with terrorists has now become evident".

Kharrazi announced Iran's readiness to discuss with Europe, including Britain, a peaceful solution to the Iraqi crisis. "Iran has seen harm from Saddam's government more than any other country, but it is opposed to any military attack to change the regime in Iraq," he said.

"It is up to the Iraqi people to determine their own destiny and establish democracy in their country," Kharrazi said as he called for a full disarmament of the Iraqi regime and its submission to UN arms inspectors.

"Iraq has the responsibility to effectively cooperate with arms inspectors in order to remove any pretext for a (U.S.) adventure," he added.

The Iranian foreign minister reiterated the Islamic Republic's call for a fundamental fight against terrorism and extremism, saying there was need to identify roots of "this ominous phenomenon", including injustice in the world, especially in the occupied Palestinian lands.

Kharrazi also expressed his concern over the escalating Israeli aggression in the occupied lands and the situation of the Palestinian people.

"The only way for the establishment of peace and stability in Palestine is to restore the rights of Palestinians and hold justice," he said.

Speaking at the Royal Institute of International Affairs in London on Wednesday, Kharrazi said that he had come to Britain to hold further discussions on how to ensure that Iraq meets its international obligations and try to prevent the war.

Iran believes that consultations, including with Iraq's neighbors and members of the UN Security Council, were "very much necessary" and this was why he was in London to see "how we can avoid war and get saddam to comply with UN resolutions," he said.

"We are living in a very crucial time and we have to do our best to resolve this crisis without the necessity of using force," Kharrazi told reporters during a joint news conference with British Foreign Secretary Jack Straw at the end of his one-day visit to London.

"I believe that the UN system, the Security Council, has the authority to take care of the Iraqi issue. It seems that it is imminent to have another resolution as another means of using diplomatic channels to ask Iraq to comply more fully with the resolution in the Security Council," Kharrazi added.

The Iranian foreign minister was having further talks with Straw over lunch and meeting the chairman of the influential Foreign Affairs Select Committee, Donald Anderson. In an interview with IRNA last week, Anderson confirmed that his all-party committee was "fully behind the British government's wish to open a serious dialogue across the board with Iran as a country of enormous geo-strategic importance."

Kharrazi also ruled out if Tehran was worried about being next in the line of the U.S. target after Iraq.

"We are not worried because Iran is very different from Iraq.

That was the strategic mistake of the Americans (to lump Iran as part of an 'axis of evil' with Iraq)," he said, adding "We are a democratic country, a popular one and have very good relations with the outside world.

"The democratic process is rapidly progressing in our country and we are ready to engage in dialogue with all countries similar to what we are having with the Europeans.

"The problem with Americans is that they are not ready to establish such a dialogue with us based on mutual respect. They are talking about power and domination," Kharrazi added.

He reiterated Iran's fears of a refugee influx in the event of a U.S. attack on Iraq, saying "We hope a war will not happen because the outbreak of the war would have its own repercussions on all neighboring countries in the region, including Iran.

"The simplest one would be the influx of refugees," he added.

The Islamic Republic has however prepared to settle probable refugees along the borders and help them return home immediately after the war, Kharrazi said.

The Iranian foreign minister warned of Iraq's disintegration in the event of a war, saying "One of the worries of Iraq's neighbors about the outbreak of the war is this issue".

"I believe as well we have to listen to Iraq's version" of events, following U.S. Secretary of State Colin Powell's Wednesday speech on alleged Iraqi deception regarding Baghdad's arms programs, Kharrazi said.

"It is also necessary that we become aware of (arms) experts' views and finally hear the United Nations' view on this," he added.

Kharrazi's reiterated that the Islamic Republic's nuclear facilities, built with Russian assistance, were intended for peaceful use and there was nothing for Iran to hide.

"Iran has joined different international conventions on the containment and peaceful use of nuclear facilities and related (international) bodies regularly inspect Iran's (nuclear) sites," he said, adding International Atomic Energy Agency Chief, Mohamed Elbaradei, will visit the Islamic Republic next month.

Straw described Kharrazi's visit as important and an answer to his visits to Tehran for three times over the past two years.

He said he had held helpful and effective talks with the Iranian foreign minister, which focused on Iraq and bilateral issues such as investment and that the two countries looked to promote their interactions.