The State Department has once again designated Iran as the world's leading state sponsor of terrorism, accusing the Islamic Republic of aiding extremists throughout the Middle East, particularly in Iraq.

Although the designation is not new, the release of the department's annual global survey of terrorism comes at a delicate moment — just days ahead of a possible meeting between Secretary of State Condoleezza Rice and Iran's top diplomat.

Rice could meet Iranian Foreign Minister Manouchehr Mottaki when they both attend a weekend conference of Iraq's neighbors aimed at boosting stability in a nation where the report says terrorist attacks, some backed by Iran, killed more than 13,000 civilians in 2006.

"Should the foreign minister of Iran bump into Condi Rice, Condi won't be rude," President Bush said Monday. "She's not a rude person. I'm sure she'll be polite."

Such a meeting on the sidelines of the conference in Egypt would be the highest-level contact between Iran and the United States since 2004.

The Bush administration in the past has resisted engaging Iran diplomatically on Iraq because of the stalemate over Tehran's uranium enrichment program, its long-standing support for anti- Israel groups and what the U.S. characterizes as a growing role in fueling the Iraqi insurgency.

But, in recent days, the administration has signaled more flexibility and Bush said if Rice meets Mottaki she will "be firm in reminding the representative of the Iranian government that there's a better way forward for the Iranian people than isolation."

Bush called Iran "a significant threat to world peace" and apart from its nuclear ambitions, which Washington believes includes attempts to construct an atomic bomb, Monday's terrorism report detailed alleged Iranian misbehavior.

Iran was singled out for criticism in a year that saw a surge of more than 25 percent in terrorist attacks that killed 40 percent more people than in 2005. Much of the increase was in Iraq where extremists used chemical weapons and suicide bombers to target crowds.

The State Department's Country Reports on Terrorism 2006 says Iran is the "most active state sponsor" of terrorism with elements of its government — notably the Revolutionary Guards and intelligence ministry — supporting many extremist groups in Iraq and elsewhere.

The two "were directly involved in the planning and support of terrorist acts and continued to exhort a variety of groups, especially Palestinian groups with leadership cadres in Syria and Lebanese Hezbollah, to use terrorism in pursuit of their goals," the report said.

The Revolutionary Guard has been "linked to armor-piercing explosives that resulted in the deaths of coalition forces" and has helped, along with Lebanon's radical Hezbollah movement, train Iraqi Shiite extremists to build bombs, it said.

At the same time, "Iran maintained a high-profile role in encouraging anti-Israeli activity, rhetorically, operationally and financially," the report said, adding Iran has yet to identify, try or turn over senior Al Qaeda members it detained in 2003.

Of the total 14,338 attacks that took place in 2006, 6,630 were in Iraq as were 13,340 of the 20,498 deaths from terrorist strikes.

Attacks also soared in Afghanistan, where 749 were recorded in 2006, a 50 percent rise from 2005 when 491 attacks were tallied, the report said.