Kharazi is expected to arrive in Tokyo late Thursday and hold talks on Friday with Koizumi and Foreign Minister Yoriko Kawaguchi, before heading back to Tehran later that day, the Japanese foreign ministry official said.

They will also likely discuss a multi-billion dollar joint development project for the massive Azadegan oilfield, located in the southwest of the Islamic republic, she said.

Japan and Iran agreed in 2000 to start negotiations over the field but Iranian officials warned that a period of exclusive signing privileges for the Japanese consortium expired at the end of June and other companies could now be considered.

The Azadegan field is considered to be the country's most important with estimated reserves of 26 billion barrels of oil.

The United States has been trying to persuade Japan to drop its investment due to concerns over Tehran's nuclear programme,

Washington -- which has dubbed Iran part of an "axis of evil" with North Korea and Iraq -- accuses Tehran of secretly trying to develop nuclear weapons.

It wants the UN nuclear watchdog, the International Atomic Energy Agency (IAEA), to take the issue to the UN Security Council, which could impose sanctions, unless Tehran meets all the requirements laid down by the agency's governing board in September.

An IAEA report, released on Monday, accused Iran of conducting two decades of covert nuclear activities, including making plutonium, but said there was no evidence as yet it was trying to build an atomic bomb.

On Wednesday, John Bolton, Washington's top diplomat for arms control, dismissed the report as "impossible to believe," but stopped short of directly criticizing IAEA director general Mohammed ElBaradei who authored the report.

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