LONDON  - Iran has benefitted most from the US-led war in Iraq and would make further gains if the continuing violence ended up dividing the country, former US secretary of state Madeleine Albright has said.

Former US Secretary of State Madeleine Albright. [AFP]

As for the Iranian nuclear row, a "high level" member of the administration should respond to a letter from Iran's President Mahmoud Ahmadinejad to US President George W. Bush and also engage in direct dialogue with Tehran, Albright told the BBC in an interview while on a visit to London.

The former top US diplomat welcomed the formation on Saturday of the first permanent government in Iraq since the ousting of Saddam Hussein, but reiterated her deep concerns about the volatile situation.

"The main problems that I see are the unintended consequences of this war, the biggest one frankly being at the moment is that the country that gained the most out of this war is Iran so I am very worried about it," she said Sunday.

Albright, who served under former president Bill Clinton between 1997 and 2001, highlighted the dangers of an internal conflict between Iraq's Shiite Muslim majority and the Sunni minority.

Asked what she thought about the risk of the country being divided into three parts -- the Kurdish north, the Sunni-dominated centre and the Shiite south -- Albright said this would be a dangerous development.

"It would have deep implications obviously on Turkey and the Kurdish issue. It would give additional power to Iran in the south with the Shia. Then the centre, which is primarily Sunni, is not homogeneous either, and one is unclear as to what role the Saudis might play or Jordanians," she said.

"I think it is better to keep it (Iraq) together, with some understanding that there needs to be local autonomy with some central control and distribution of oil revenues."

Albright, 69, has written a book about religion and politics in which she says the March 2003 Iraq invasion may turn out to be the greatest disaster in US foreign policy.