Beirut: A senior Shiite Muslim cleric says that American forces in Iraq could end up virtual 'hostages in Iran's hands' if the United States attacked Iran.

Grand Ayatollah Mohammad Hussain Fadlallah, former spiritual guide to Hezbollah and still influential with many militants, said on Tuesday that US President George W. Bush's war on terror has encouraged extremists, not curbed them, and has deepened Arab animosity toward America.

"The American people must realise that their administration is not fighting terrorism but rather is causing it," Fadlallah said, speaking at a mosque in the Hezbollah stronghold of south Beirut where his home and office were levelled by Israeli warplanes during last year's summer war with Israel.

The top religious authority for Lebanon's 1.2 million Shiites, Fadlallah said he thought a US attack on Iran was unlikely but would ignite the region if it took place.

"The war could probably set the region ablaze at various levels," he said. "In the event of a war on Iran, US soldiers in Iraq might become hostages in Iran's hands."

The US has about 170,000 troops in Iraq and is already engaged in fighting Iran-backed Shiite militias.

Fadlallah did not elaborate and declined to say what he thought Hezbollah would do in the event Iran was attacked.

Failure

"I believe that the conditions in the region, the failure facing President Bush's policies in the region, and fears by [Arab] Gulf states that a war on Iran will probably destroy sensitive areas - especially oil wealth sources - makes an attack on Iran highly unlikely," the black-turbaned, white-bearded cleric said.

There are increasing worries among some Arabs that the US or Israel plans to strike Iran, which is suspected by the West of trying to develop a nuclear weapons programme.

Though Washington has stressed the need to solve differences with Tehran diplomatically, the Bush administration has said it's not ruling out any options.

In a show of defiance, Iran has staged large-scale military parades and made claims recently that its military would strike back if attacked.

"Given the high costs of the war in Iraq, a new war on Iran might lead to the collapse of the US economy," Fadlallah warned.