TEHRAN, Feb 1: Iran's foreign minister revealed on Sunday that Egyptian President Hosni Mubarak has declined an invitation to attend an economic summit in Tehran later this month , a visit that was supposed to have heralded a resumption of diplomatic ties between Iran and Egypt.

Kamal Kharazi also asserted the two sides needed more time before full diplomatic ties could be restored, in comments that backtracked on earlier Iranian assertions that the old rivals were on the brink of making up.

"Mr Hosni Mubarak is not going to participate himself, but a high-ranking delegation is going to be sent," Kamal Kharazi told reporters.

"Iran-Egyptian relations are in the reconstruction phase and need time," he added. "There should be a natural and definite course for relations to be resumed in the near future."

"What is important is that both sides have decided on this and are working on it," he added. Iran had invited Mubarak to a summit of the Islamic group of eight due to be held in Tehran from February 19-20.

The group was set up in 1998 on Turkey's initiative. It comprises Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey.

Diplomatic ties between Cairo and Tehran were severed in 1979, the year that Egypt signed a peace treaty with Israel and gave asylum to Shah Mohammad Reza Pahlavi when he was deposed by the Islamic revolution.

Relations were particularly bad while Egypt supported Iraq during its 1980-1988 war with Iran. However, trade and other ties have been improving since the 1990s.

Iran and Egypt agreed to work towards resuming full ties during a meeting between the Egyptian president and his Iranian counterpart Mohammad Khatami in Geneva in December. The foreign ministry then announced it was inviting Mubarak to the February summit.

At present, each side only has interest sections in each country. Last month, Iran lifted a key obstacle to a renewal of relations with Egypt when Tehran city council agreed to rename a city centre street bearing the name of Khaled Eslamboli, who assassinated the then Egyptian president Anwar Sadat as he reviewed a military parade in 1981.

The street name has been one of several major sticking points with Egypt, the only Arab state with which Iran does not have normalised relations. However the street signs have yet to be taken down, and a huge mural of the assassin still looks over the busy city centre road. The street is supposed to be renamed "Intifada Avenue" - a tribute to the Palestinian uprising.

But the street name was not the only problem, and Egyptian Foreign Minister Ahmed Maher asserted that renewed ties were "not just a question of changing the name of a street." Egypt has also taken issue with Iran's alleged support of Egyptian Islamist groups. -AFP