Iranian president Mahmoud Ahmadinejad and his Afghan counterpart Hamid Karzai vowed on Saturday to develop bilateral cooperation in all fields, the official IRNA news agency reported.

Ahmadinejad said at a formal welcome ceremony that he wished Karzai's visit would open a new period of growing relations between the two neighbors.

Iranian President Mahmoud Ahmadinejad (R) talks with his Afghan counterpart Hamid Karzai in Tehran, Iran May 27, 2006.[Reuters]

"Iran is keen on developing cooperation with Afghanistan on agriculture, telecom, modern technology, transport, information technology, science and technology, education and culture," Ahmadinejad said.

"Iran believes that Afghanistan should strive to remedy the damages inflicted by foreign invasion and perpetual war in the country," he added, pledging Iranians' support for the Afghans in the future.

Karzai also expressed the will to further trade and economic cooperation with Iran, noting that Iran-Afghan relations enjoyed extensive progress in the past four years.

"Iran has exercised excellent cooperation with Kabul government on Afghan reconstruction," Karzai was quoted as saying.

He also thanked Iran for hosting around two million Afghan refugees fleeing wars in the past 20 years.

He hoped to boost industrial exports to Iran as the Iranian exports to Afghanistan reached 500 million U.S. dollars.

Heading a high-level political and economic delegation, Karzai arrived in Tehran earlier in the day for a three-day visit.

During the stay, the two sides would focus on major bilateral and regional developments, Iranian Foreign Ministry spokesman Hamid-Reza Asefi said, hailing the visit as a "positive step" towards cementing bilateral ties.

Several agreements on proposed joint ventures as well as cooperation in judiciary, cultural, energy and environment fields are expected to be signed, Asefi said.

Meanwhile, the spokesman denied speculations that Karzai would mediate between Tehran and Washington over nuclear standoff.

"These reports are baseless and the issue (mediation) is not in the agenda of Mr Karzai's visit," he said.

Afghanistan has a close relationship with the United States, which maintains about 22,000 troops in Afghanistan to fight a mounting insurgency by the Taliban toppled in a U.S.-led anti- terror campaign in 2001.