The Fars News Agency quotes Iraqi Defense Ministry spokesman Maj. Gen. Mohammed al-Askari saying Iraqi military forces have "surrounded" Ashraf City in Iraq's eastern Diyala province.

The report says the move came as the Iraqi government called on U.S. military forces to halt their security operations in the area.

The United States and several other countries classify the PMOI as a terrorist organization in part due to its activity during the era of Saddam Hussein. That status is being reconsidered in light of a British decision to delist the group.

An assistant at the British Parliamentary Committee for Iran Freedom, who spoke to United Press International on condition of anonymity, said the Fars report was erroneous.

Iranian lawmakers called on the national government to review its relationship with the United Kingdom in response to the reclassification.

Ali Safavi, a member of the Foreign Affairs Committee of the National Council of Resistance of Iran, told UPI the report was an Iranian attempt to threaten the group in Iraq.

"These reports and developments foretell of the Iranian regime's extensive plots against the residents of Ashraf City, which seriously endanger the lives of 3,500 people living there," he said.

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