President Bush issued a stark warning to Iran Thursday that it will face U.S. opposition if it meddles with the new interim government in Afghanistan.

Responding to reports that Iran is trying to shake the foundations of the interim regime, Bush warned Tehran that the U.S.-led coalition "will deal with them diplomatically, initially" if they interfere with the government that was established after the fall of the Taliban.

Bush's comments came just as White House officials were poring worriedly over information that Iran was challenging the authority of Kabul's new government, led by Hamid Karzai, and might be harboring Al Qaeda terrorist leaders who have fled.

"Iran must be a contributor in the war against terror," Bush told reporters after an Oval Office meeting on domestic issues. "Our nation, in our fight against terrorism, will uphold the doctrine of either you're with us or against us."

Iranian government officials issued a statement Thursday refuting the claim that their country was providing refuge for Al Qaeda terrorists.

"I am denying it," foreign ministry spokesman Hamid Reza Asefi told Reuters news service. "Our borders are tightly closed and the Islamic Republic of Iran in no circumstances would let Al Qaeda members, fighters and supporters of bin Laden enter the country."

Bush said Iran, which early on indicated to the U.S. that it would cooperate in the military action against terrorism, shouldn't allow Al Qaeda members to take refuge within its borders as a way of weakening the new government in Kabul.

"We would hope that they would continue to be a positive force in helping us to bring people to justice," the president said. "We would hope for example they wouldn't allow Al Qaeda murderers to hide in their country. We would hope that if that be the case, if someone tries to flee into Iran, that they would hand them over to us."

He urged Iran to stay committed to the goals of the coalition against terror.

"If they're a part of the coalition, they need to be an active member of the coalition," Bush said.

As for the long-term goal of stability in Afghanistan, where a transitional government rules, Bush said the U.S. wants to work with Iran.

"If they in any way, shape or form try to destabilize the government, the coalition will deal with them, you know, in diplomatic ways, initially," Bush said. "We would very much like them to be active participants in a stable Afghanistan. It's to their advantage."

Pentagon and intelligence officials also said Thursday that Iran is exerting its military and political power because it's afraid Afghanistan is becoming too Western and losing its Islamic influence, according to a report in The New York Times.

"Iran is trying to make sure that Afghanistan remains an Islamic state and does not become more secular, like Turkey," one defense official told the Times.

The Times report said Iran is targeting an area of the war-damaged country where it has held a steady influence. Though Iran has long been against the Taliban and skeptical of Al Qaeda, intelligence information now shows the country is giving safe haven to a small group of Al Qaeda fighters who have fled military troops fighting in Afghanistan, the Times quoted Pentagon officials as saying.

The paper also reported that United States Special Forces around Herat, in northwestern Afghanistan, have said that Iranian agents have entered the region and threatened some tribal leaders and bribed others to rebel against the U.S. effort.

"Iran is trying to stir up mischief," a senior military official told the Times Thursday. "So far we haven't taken any action, but we're keeping a very close eye on it."

In response to that report, Iran's foreign ministry spokesman Asefi told Reuters that his government was not trying to interfere in Afghanistan's internal affairs to try to set up an Islamic system of government in the neighboring country.

"Afghan people should decide their own future," he said.

Iran has expressed the desire for a prominent role in rebuilding the battered Afghanistan, which has been at war for most of the last 15 years.

The Times quoted experts as saying that Iran could be meddling with the interim regime because it's concerned about a strong U.S. presence in Afghanistan. The State Department lists Iran as the most active state supporter of terrorism in the world, primarily because it backs the Palestinian militant groups Hamas and Islamic Jihad.

The Associated Press contributed to this report.