Manama: Iran has rejected as "baseless and fabricated" a report in a British newspaper claiming that Tehran has trained secret networks of agents to liaise with Shiites in Bahrain and other Gulf states to attack Western interests and incite civil unrest in the event of a military strike against its nuclear programme.

"The motives for the publication of such controversial and unrealistic reports are perfectly clear to all. The claims are fabricated, have no shred of truth and are part of doomed attempts to damage relations between Iran and the Gulf countries," Iran's embassy in Manama said in a statement sent to the press on Thursday.

The embassy said all its activities in the region, particularly in Bahrain, were "very clear and transparent" and "based on the principles of mutual respect and non-interference in domestic affairs".

The Sunday Telegraph on March 4 said "spies working as teachers, doctors and nurses at Iranian-owned schools and hospitals have formed sleeper cells ready to be 'unleashed' at the first sign of any serious threat to Tehran".

According to the paper, the "spies" were said to be recruiting fellow Shiites in the region.

"Were America or Israel to attack Iran, such cells would be instructed to foment long-dormant sectarian grievances ... in wealthy states such as Dubai and Saudi Arabia," the paper said, quoting Adel Assadinia, a ex-career diplomat who was Iran's consul-general in Dubai and an adviser to the Iranian foreign ministry.