Iran and the United States met at expert level on the sidelines of an international conference in Egypt on Friday, Iraqi Foreign Minister Hoshiyar Zebari said.
"A meeting took place on the sidelines of the meeting, not at foreign minister level but at expert level, between the American side and the Iranian side," he told a news conference.
Diplomats said US Secretary of State Condoleezza Rice had been open to a meeting with Iranian Foreign Minister Manouchehr Mottaki - which would be the highest level contact since Iran's 1979 revolution - but the Iranians were cool to the idea.
Yesterday Rice did meet Syrian Foreign Minister Walid al-Moualem, marking a shift in US President George W. Bush's once resolute opposition to high-level contacts with Iran and Syria as he seeks ways to end the Iraq conflict.
Ms Rice and Mr Mottaki have been together in the Egyptian Red Sea resort of Sharm el-Sheikh for two days for the conference on financial support for Iraq and on relations with its neighbours.
Mr Zebari added: "I don't know what went on in that meeting (of experts) but I think it was a positive sign that at least such a thing did take place while we are here.
"This is a process I think. It needs more work. There is a lot of suspicion. There is a lot of mistrust. But it is in my country's interest really to see a reduction of this tension."
Egyptian Foreign Minister Ahmed Aboul Gheit said the meeting was "the beginning hopefully of a process", adding that the officials who met were ambassadors. He did not identify them.