Iraq is the only topic of conversation as the US and Iran finally meet

Iran and the United States have finally broken the diplomatic ice with face-to-face talks that both sides described as a "positive" first step in the search to stabilise Iraq.

Whether the four hours of talks yesterday between the two countries' ambassadors to Baghdad produced any concrete agreement was far from clear last night. But both Tehran and Washington said the discussions - the first direct, bilateral and publicly announced meeting between them in a generation - had been a worthwhile exercise.

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Ryan Crocker, the US envoy, described the session at the office of the Iraqi Prime Minister, Nouri al-Maliki, as "positive and businesslike". Similar adjectives were used by his Iranian counterpart Hassan Kazemi-Qomi, who told Iranian television that the talks were "frank and clear".

Since the rupture of diplomatic relations in 1979, amid the 444-day hostage crisis at the US embassy in Tehran, mid-level officials have occasionally met - most notably after the 9/11 attacks in 2001 and in mid-2003 after the US invasion of Iraq - but always in secret.

This time, however, the contact was announced in advance. And even though the discussions were strictly confined to Iraq and did not touch on other areas of dispute between the two countries, the very fact it took place amounts to an acceptance by the Bush White House of the need to bring Iran and Syria into negotiations to solve the Iraq crisis.

"Some problems have been raised and studied," Mr Kazemi-Qomi said, adding that the two sides had "agreed to support and strengthen the Iraqi government". For his part, Mr Crocker said both Tehran and Washington agreed that "a secure, stable, democratic Iraq at peace with its neighbours" was in both their interests.

But the underlying divide between them seems as wide as ever. Speaking to reporters afterwards, the US ambassador complained that Iran's reasonable-sounding policy was contradicted by its behaviour. "What we need to see is action on the ground," he declared, urging Tehran to stop arming, funding and training militant Shia groups, some of whom had attacked American troops.

In response, Iran says that the US should not be in Iraq at all.

Ostensibly, there was disagreement too on any follow-up. The Iranians indicated that Washington had agreed to their proposal of a three-way mechanism, involving the Iraqi government, to co-ordinate security policy. Mr Crocker indicated merely that he was referring the suggestion back to his government.

And however ground-breaking the talks, Iraq's murderous sectarian strife continued unabated. As Americans and Iranians met inside the heavily fortified Green Zone, a car bomb exploded near a revered Sunni mosque in the capital, killing at least 20 people and wounding almost 50 more, including several Iraqi policemen. The minaret of the Abdul Qadir Gilani mosque was badly damaged, officials said.

Although no new casualties were reported by the Pentagon yesterday, at least 103 American servicemen have been killed in Iraq so far this month, meaning May could be the bloodiest month yet in 2007.

Barring an improbable assertion of authority by the Maliki government - or an equally unlikely reconciliation between Shias and Sunnis - any improvement in security will require genuine co-operation between Iran and the US. But a host of other disagreements complicates the issue. Yesterday's meeting apparently did not even tackle the latest tit-for-tat spying allegations. In recent weeks Iran has detained or arrested several Iranian-Americans, and claimed to have uncovered spy rings organized by Washington and its allies. These allegations are plainly linked to the five Iranian officials held by US forces in Iraq. Washington says the latter are spies. Tehran claims they are diplomats.

Looming in the background is Iran's alleged quest for nuclear weapons, amid continuing speculation of an American military attack on Tehran's nuclear installations should the threat of tougher United Nations sanctions fail to achieve results.