"The sacrilege of holy sites is not acceptable at all," Foreign Ministry spokesman Hamid Reza Asefi told reporters in a weekly news briefing here.

"The American government naturally has to bear the consequences of such actions," he added.

The United States has sent troops as well as tanks into the two cities, sparking bloody clashes with forces loyal to Iraqi cleric Moqtada al-Sadr, which have taken their toll also at the holy quarters.

Friday exchange of gunfire in Najaf damaged the golden dome of the holy shrine of Imam Ali (AS).

"American actions all across Iraq are not acceptable, but there is added sensitivity when this comes to Najaf and Karbala because of the presence of holy quarters and houses of eminent sources of religious reference," Asefi said.

The United States is already in hot water over revelations about widespread mistreatment and torture of Iraqi prisoners by US forces.

According to those revelations, prisoners were kept naked, stacked on top of each other, compelled to wear hoods over their heads, forced to engage in sex acts, struck by American jailers, and photographed in humiliating poses.

A recent poll released in the United States showed 80 percent of Iraqis mistrust the US-led coalition.

The gruesome images, picturing US troops obscenely taunting Iraqi prisoners were first released by CBS news network in its `60 Minutes II` program.

US President George W. Bush has called the scandal a taint on `US honor and dignity`, while stressing that it would not deter the United States from its mission to establish `democracy` in Iraq.

Asefi said, "Americans entered Iraq with a promise (to establish) democracy and hold free elections, but the outcome of their action has become torturing the Iraqi people and sabotaging (efforts) to implement Iraqi people`s demands.

"The true nature of America has been unveiled now, but nobody knows why the Americans insist on their increasing mistakes.

"Americans` actions in Iraq do not comply with their slogans, recent events and attack on holy sites in Najaf and Karbala being one example," the Iranian Foreign Ministry spokesman said.

Asefi ruled out Tehran`s mediation in the bloody stand-off, stressing that `it is impossible to mediate between the occupiers and the people whose country has been occupied; such a mediation is basically wrong`.

The official however said that the Islamic Republic was keeping up its contact with various ethnic groups in Iraq, especially the Kurds, Shi`ite and Sunni Muslims, and `trying to reduce differences` them.

"This is our duty and it cannot be compared to mediation between the Iraqi people and the occupiers," he said.

Asefi stressed that Tehran`s efforts to resolve differences among Iraqi groups would continue.