WASHINGTON Ñ The United States has dropped its demand that Russia end all arms sales to Iran.

Instead, the Bush administration has agreed to negotiate with Moscow on the type of weapons the United States would permit for export to the Islamic republic. U.S. officials said this was a change from Washington's insistence that Russia observe a 1995 understanding that bans further arms sales to Teheran.

Russian Foreign Minister Igor Ivanov and U.S. Secretary of State Colin Powell agreed last week that the two countries would establish working groups to discuss what weapons the United States would find objectionable, Middle East Newsline reported. The discussions could continue when President George Bush meets Putin on June 16 in Slovenia.

The administration's new policy has dismayed Israel, which is urging Washington to continue efforts to stop Russian arms sales to Teheran.

Housing Minister Natan Sharansky held talks with the Bush administration in the United States to stop the sale of Russian nuclear components and technology to Iran.

Sharansky said he was disappointed by the response from the administration. The minister, who is responsible for the issue of Iranian-Russian military cooperation, said he was told by Deputy Defense Secretary Paul Wolfowitz that the administration requires several months to formulate a policy. Ivanov and Powell discussed the issue during their meeting last week. The Russian arms sales were also discussed with U.S. Undersecretary of State John Bolton.

Russian President Vladimir Putin has said he will not honor the 1995 understanding and officials said Moscow is intent on signing a multi-billion dollar arms deal with Teheran over the next few weeks. The deal could include the S-300 anti-aircraft system as well as tanks and fighter-jets.

Boucher said the United States has what he termed "serious concerns about some of the sales to Iran." He would not elaborate, but he said Russia and Iran have not yet concluded arms sales.

A U.S. official said one system the administration finds objectionable is the S-300 anti-aircraft missile. The official said Gulf Arab countries have expressed concern to the United States that the S-300 would threaten regional security.

"The issue of proliferation as part of the overall strategy came up," Boucher said. "The issue of sales to Iran came up."

But the spokesman stressed that Washington would not oppose all Russian weapons sales to Iran. He said the two sides are discussing weapons that Washington does not want to see sold.

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