A visit by Egyptian President Hosni Mubarak to Iran was ruled out but the level at which Cairo will participate in an economic summit in Tehran later this month still remains to be seen, IRNA reported from Tehran on Sunday.

That will set the tone for the two countries on how to proceed with the 'reconstruction' of their diplomatic ties, which have been almost non-existent because of the Camp David peace treaty with Israel.

The two countries moved early last month towards rapprochement after Egyptian Foreign Minister Ahmad Maher renounced the accord as a thing of ancient history.

The gesture was immediately reciprocated by Iran, which renamed the Khaled Islambouli street, called after the assassin of former Egyptian president Anwar Sadat.

A senior Foreign Ministry official said here Sunday that 'it had not been said from the outset that Mr. Mubarak was coming to Tehran'. "It is not clear yet in what capacity Egypt will participate in the summit," Foreign Ministry spokesman Hamid Reza Asefi told reporters during a weekly press briefing.

He said 'most of the group of eight members have announced that they will attend it at the head of state level'.

Press have cited official sources in Egypt as saying that President Mubarak was intending to send Maher to the summit at the head of a delegation.

Iran's Foreign Minister Kamal Kharrazi said here Sunday that 'relations between Iran and Egypt are in the restoration phase and need time'.

"There should be a natural and definite course for relations to be resumed in the near future. What is important is that both sides have decided on this and are working on it," he said.

The group of eight summit is due to be held in Tehran between February 19 and 20. It includes Turkey, Malaysia, Pakistan, Indonesia, Iran, Bangladesh, Egypt and Nigeria.

Tehran and Cairo first broke the ice in June 2000 after President Mohammad Khatami spoke over phone with Mubarak in the first such conversation by the presidents of the two countries.

Khatami and Mubarak met in Geneva in December, on the sidelines of a UN technology summit. Iran said later it had invited the Egyptian president to attend the summit of eight developing Islamic countries (D-8) in Tehran.

The Islamic Republic severed its ties with Egypt after its former President Anwar Sadat signed the Camp David peace accord with the Zionist regime and harbored defunct Shah.

Speaking to IRNA in Cairo in January, Egyptian Foreign Minister Maher said that the Camp David accord 'does not exist anymore and is merely a thing of the past'.

"There have been many changes and I believe that this case between Iran and Egypt has already been closed... What matters now is the interest of Iran and Egypt to work with each other."

At the request of the Foreign Ministry, Tehran City Council then agreed to rename the Khaled Islambouli street to Intifada (uprising) of the Palestinians in the occupied territories.

Those conciliatory gestures fuelled speculation that the two Middle East giants may imminently renew full diplomatic ties. But, Egypt later assumed a half-hearted attitude, and Maher was cited as saying that an imminent normalization of ties was a thing 'in the future'.