Iranian opposition groups seeking Washington's help to oust the country's Islamic theocracy could be as dangerous as the regime they want overturned, say Middle East experts who urge lawmakers to think twice before funding exiles in the United States.

In fact, one opposition group busy lobbying Capitol Hill serves as an umbrella to an organization listed on the State Department’s list of terrorist groups, and until Operation Iraqi Freedom began, was sheltered by none other than ousted Iraqi dictator Saddam Hussein.

“There are people who have ideas about funding the opposition — the problem is, which groups do you fund?” asked one House GOP aide who did not want to be named. “The problem is they are not all what they seem. Some are real dirtbags.”

Following war with Iraq and dialogue with North Korea, the Bush administration is trying to develop policy for the third member of the "axis of evil," Iran.

Lawmakers have been involved in the debate, suggesting in recent weeks varying responses to deal with mounting evidence that Iran is developing a nuclear weapons program and harbored Al Qaeda operatives responsible for the May 12 bombings in Saudi Arabia that killed nine Americans.

Some lawmakers have suggested aiding the National Council of Resistance of Iran (search), which has been lobbying intensely on and off Capitol Hill for support in overthrowing the fundamentalist regime in Iran.

But NCRI faces serious questions about its legitimacy. One of its member groups is the People's Mujahedin Organization of Iran (search), also known as the Mujahedin e-Khalq (search). MEK is listed on the State Department’s official list of terrorist organizations, and has been blamed for supporting the U.S. embassy takeover and overthrow of the Shah in 1979.

Though NCRI espouses political pluralism, fair and open elections, equality, free markets and separation of religion and state, the Terrorism Resource Center (search) in Virginia said MEK is responsible for orchestrated attacks over the last two decades that have resulted in the deaths of numerous Iranian officials in several countries.

"They’re bad news,” said Jim Phillips, a foreign policy expert with the Heritage Foundation (search) in Washington, D.C. “They are a terrorist group. They are very anti-American, though they hide behind a democratic charade. I would be against any relationship with them.”

NCRI chief congressional liaison Alireza Jafarzadeh (search) defends MEK, saying it has never targeted American interests nor asked for financial aid from Washington. In the last month, it has offered critical intelligence to the U.S. government, providing information on two nuclear bomb-making facilities previously unknown to U.S. officials.

MEK’s "only focus is on overthrowing the clerics in Iran," Jafarzadeh told Foxnews.com. He added that MEK does not deserve to be on the same terrorism list as groups like Hezbollah, which supports the Iranian regime.

So far, most lawmakers say they have not decided how they want to pursue “regime change” in Tehran. But many are sure they don't want war and suggest a better way is to aid reformers seeking to oust the Iranian clerics.

Rep. Brad Sherman, D-Calif., said he would consider direct assistance to opposition groups, though he did not specifically mention NCRI. He said he also plans to introduce legislation that would impose import sanctions on Iranian goods and limit the funding Tehran gets from the World Bank.

Sen. Sam Brownback, R-Kan., has sponsored legislation that would put more money into Radio Farda, a pro-democracy, Persian-language radio service sponsored by the United States and beamed to Iran.

Brownback is firm that he would rather the administration work with reformers than negotiate with the government, currently on the State Department’s list of countries that sponsor terrorism. He has expressed no interest in supporting specific opposition groups in the United States.

Rep. Bob Ney, R-Ohio, said he would like to steer clear of any funding for exile groups.

“In our zeal for democracy [in Iran], let us not call a terrorist a good terrorist," said Ney. “I think we have to be careful of who we are funding, and [MEK] is one example. I don’t think a dime should go to a group like that.”

Ney said he supports open dialogue with the Iranian government "from the top down," and does not want to dismiss out of hand the virtues of diplomacy with moderate members of Parliament.

"If there are members of Parliament who want to communicate with members of Congress, I think that dialogue should occur," he said. "I don't want to shut anyone out."

Neal Pollard, co-founder of the Terrorism Resource Center, said fueling opposition groups with the goal of “planting the seeds of democracy,” has worked in the past, but it has also failed miserably.

“At the end of the day, democracy is a good thing and any organization that wants to promote democracy and free trade is a good thing,” said Pollard. “But funding, training and equipping an opposition group should be a case-by-case decision made by the president. It’s a precarious business.”