The defence department is trying to muster support from exiled Iranian fighters of the People's Mujahideen Organisation (MKO) and from Reza Pahlavi, son of the last Shah of Iran who ruthlessly suppressed the MKO before his own downfall.

The Pentagon's decision to negotiate a ceasefire with MKO members in Iraq - who were previously designated by the US as terrorists - has alarmed State department diplomats and the British Foreign Office.

The US military forged a deal with MKO militants in eastern Iraq in late April, allowing them to keep their weapons and uniforms. Weeks before, US bombers had blasted their camps.

The MKO, backed by Saddam Hussein, has fought the clerics ruling Iran since the early 1980s when the two sides fell out in the power struggle that followed the 1979 revolution. Before that, the MKO, with a potent mix of Marxism and Islam, killed US military personnel and civilians in Tehran and backed the 1979 takeover of the US embassy there.

Not only did the ceasefire alarm the ayatollahs in Tehran, it also shocked Colin Powell, secretary of state, who was kept out of the loop. Now the neo-conservatives in the Pentagon who authorised the truce are also rustling up support for the MKO's former enemy, Mr Pahlavi.

Mr Pahlavi's backers believe he could play the same role in Iran as they hope Ahmad Chalabi, head of the Iraqi National Congress and another Pentagon favourite, will play in Iraq.

"The shared objective is regime change in Iran, so they don't see the contradiction," commented one veteran analyst.