Iran on Tuesday rejected a U.S. demand to hand over senior Al Qaeda (search) operatives, saying the terror suspects would stand trial in Iranian courts, state-run radio reported. The United States called the rejection an indication Iran is "supporting terrorism."

A day earlier, Secretary of State Colin Powell (search) insisted senior Al Qaeda operatives held by Iran should be turned over to their countries of origin or to the United States for interrogation and trial.

"Al Qaeda operatives currently in [our] custody have committed crimes in Iran," Foreign Ministry spokesman Hamid Reza Asefi was quoted by the radio as saying. "They will be tried in Iranian courts and will be punished on the basis of the laws of the country."

Asefi said Powell's demand was "irrelevant."

Responding Tuesday in Washington, State Department spokesman Richard Boucher (search) said: "We remain deeply concerned about these kind of objectionable and damaging policies that Iran has pursued with regard to supporting terrorism .... And we remain particularly concerned by the presence of senior Al Qaeda figures in Iran."

The United States has accused Iran of developing nuclear weapons and harboring Al Qaeda fugitives. President Bush included Iran in his "axis of evil" along with North Korea and prewar Iraq.

The United States has not had diplomatic relations with Iran since Americans were taken hostage at the U.S. Embassy in Tehran in 1979 and held for 444 days. Iranian revolutionaries toppled the U.S.-backed Shah of Iran in 1979 and replaced his government with one controlled by Muslim religious leaders.

Asefi, the Iranian Foreign Ministry spokesman, said Sunday that Iran had given the U.N. Security Council the names of 225 suspected Al Qaeda operatives it detained and returned to their countries.

When asked how many Al Qaeda operatives were in Iranian custody, Asefi would only say they had "a number of them." He said Iran would not reveal the number and names of Al Qaeda suspects in custody for security reasons.

Asefi also said Iran told the United Nations about 2,300 people who sneaked across the border from Pakistan between October 2002 and July 2003 and were deported back to Pakistan.

Powell said Monday the U.S. administration was seeking "clarification" of the information Iran had provided to the United Nations. On Tuesday, Boucher said the United States still wants answers.

Intelligence Minister Ali Yunesi confirmed in July that Iran was holding "a large number of small and big-time elements of Al Qaeda."

American counterterrorism officials said last week that a handful of senior Al Qaeda operatives who fled to Iran after the war in Afghanistan two years ago may have developed a working relationship with a secretive military unit linked to Iran's religious hard-liners.

The U.S. government is not certain of the extent of any contacts with the Iranian unit, called the Qods Force, said the officials, who spoke on condition of anonymity.

U.S. intelligence suggests that Al Qaeda figures in Iran include Saif al-Adl, a top Al Qaeda agent possibly connected to May bombings in Riyadh, Saudi Arabia; Abu Mohammed al-Masri, wanted in connection with the bombings of two U.S. Embassies in Kenya and Tanzania in 1998; Abu Musab Zarqawi, whom some U.S. officials describe as the key link between Al Qaeda and toppled Iraqi leader Saddam Hussein; and Usama bin Laden's eldest son, Saad.

The Al Qaeda operatives are believed to have fled to Iran from neighboring Afghanistan during the Taliban's fall in 2001 or 2002.