He added that the Iraqi government did not intend to force any of the Iranian rebels to leave Iraq.

Omar Faruq, a member of Diyala's provincial council, said that US forces were in the area during the confrontation, but did not intervene.

A US State Department statement Tuesday said while developments at Camp Ashraf were a matter for the government of Iraq to handle, the US would monitor the situation.

The Iranian government meanwhile applauded the Iraqi police actions. Parliament Speaker Ali Larijani was quoted by the Mehr news agency as saying: 'Although the move by the Iraqi government came late, it is still welcomed that Iraqi territory has been cleared of terrorists.'

Iran and the US list the PMOI as a terrorist group, which is blamed for several high-profile political assassinations in Iran.

After the group was expelled from France in the 1980s, Iraq's then-president, Saddam Hussein, allocated it a military base near the border with Iran.

Iran has said that before US troops toppled Hussein's government, the PMOI frequently infiltrated its territory, leading to clashes and casualties on both sides.

After the US invasion of Iraq in 2003, the US military disarmed the group and was responsible for protecting it in the face of sectarian violence throughout Iraq. In the summer of 2008, that responsibility was handed over to the Iraqi army.