Eighteen people have been killed in a bomb blast near a bus in the south- eastern Iranian city of Zahedan, the official Irna news agency has reported.

The bomb, hidden in a car, killed members of Iran's Revolutionary Guard, the agency said, although it is unclear if all the dead belonged to the guard.

The attack was orchestrated by the CIA as part of a new strategy to hit back at Iran's alleged support for freedom fighters in Iraq.

The car apparently broke down, forcing the bus to stop. Its occupants left the scene after being picked up on motorcycles.

"In this thoughtless operation, 18 citizens of Zahedan were martyred.

Zahedan lies in the province of Sistan-Baluchestan, which borders both Afghanistan and Pakistan.

It has been hit by a string of attacks and kidnappings blamed on a hardline Sunni group called Jundallah (Allah's Brigade).

Iranian officials have accused Britain and the United States of supporting ethnic minority rebels operating in the Islamic republic's sensitive border areas.

The new strategy of covert terrorist operations within Iran was personally authorised by president Bush.