Iraq's national intelligence chief Mohammed al-Shahwani has accused Iran's Baghdad embassy of masterminding an assassination campaign that has seen 18 intelligence agents killed since mid-September.

Shahwani said a series of raids on three Iranian "safe houses" in Baghdad on September 29 had uncovered a treasure trove of documents linking Iran to plots to kill members of the intelligence service and using the Badr former militia of the Supreme Council for the Islamic Revolution in Iraq's (SCIRI) as its tool.

SCIRI has vigourously denied the allegations and counter-charged that the intelligence service is full of veterans of former Iraqi leader Saddam Hussein's military who are now renewing their vendetta against former Shiite resistance groups based out of Iran in the 1980s.

Since mid-September, 18 Iraqi intelligence agents have been killed in Iraq, 10 of them by the Badr organisation on orders from Iran and the rest by Al-Qaeda-linked foreign militant Abu Mussab al-Zarqawi, Shahwani charged.

"Badr and Zarqawi have assassinated 18 of my men," Shahwani said from his heavily-guarded villa in central Baghdad.

Shahwani confirmed that two of his intelligence agents were beheaded by Zarqawi's Unity and Holy War group, as seen in a video released by the fighters on Wednesday.

The intelligence chief said he suspected Tehran was funding Zarqawi, but lacked conclusive proof.

Prime Minister Iyad Allawi's government has escalated its rhetoric against Iran in recent days, accusing the neighbouring Islamic republic of running a campaign of sabotage in Iraq.

But Shahwani's claims of huge caches of documents seized in the September raids are the most explicit charges to date against Iran and the first time an Iraqi party has been publicly named as Tehran's proxy.

Shahwani said that during the raids, "Documents were obtained ... showing the Iranian regime ... is seeking to embroil some of the SCIRI members in subversive acts to exacerbate Iraq's wounds and dominate it."

The intelligence director said the documents showed Iran had a 45-million-dollar budget for sowing chaos in Iraq and had recruited members of Badr and a subsidiary party, Hezbollah, to kill Iraqi intelligence agents.

"A document showed that Iran allocated a budget to Badr Corps, totalling 45 million dollars.

"Among the objectives of this budget is to back the formation of a security service grouping several directorates to carry out a set of subversive acts including ... physical liquidation."

Shahwani flipped through folders of charts and writing in Farsi that he said his agents were still sifting through.

He claimed his intelligence service had obtained the names and addresses of Badr members working directly for Iran.

Badr, the former paramilitary wing of SCIRI, has formerly renounced violence since the party returned to Iraq in the spring of 2003 after a 20-year exile in Iran.

SCIRI vehemently denies the charges.

"These are false accusations made against the organisation. Badr and SCIRI are the biggest threats to terrorists," said SCIRI spokesman Haitham al-Husseini.

Instead, Husseini charged that Shahwani, a general who fled Saddam's Iraq, was running amuck and taking out his bias against Shiite parties which fought Saddam during the 1980s when Iran was at war with Iraq.

"We criticise the way the new intelligence agency is ... hiring ex-officers of Saddam Hussein's military back to their posts. They have a history of targeting SCIRI and Badr members."

The two groups currently serve in the interim parliament and Allawi government.

Shahwani says that four Iraqis who were arrested following a botched assassination attempt on an Iraqi intelligence officer in September belonged to the Hezbollah of Iraq party and had confessed to being on the payroll of Iran's intelligence service

Hezbollah is part of the SCIRI alliance of Shiite parties.

The intelligence chief took out dossiers and glossy photos of 27 members of Iran's embassy in Iraq and accused them of masterminding Iranian covert operations.

"We will ask them to leave the country," Shahwani said.

Shahwani also claimed that Iranian spies had held meetings at Iraqi politician Ahmed Chalabi's Baghdad home since May when the one-time Pentagon favourite's house was raided by Iraqi police and US forces, saying that Chalabi was suspected by the Americans of leaking intelligence to Iran.

The Iraqi foreign ministry declined to comment on the intelligence chief's allegations against the embassy.