Afghans refugees living in Iran are being plunged deeper into poverty as sanctions slapped on Tehran over its disputed nuclear drive sap the economy, a refugee agency has warned.

"Sanctions on Iran have been bad news for both Afghan refugees and for humanitarian operations," Jan Egeland, secretary general of the Norwegian Refugee Council (NRC), told AFP during a visit to Tehran this week.

Some five million Afghans driven by war, oppression and poverty have crossed the border into Iran and Pakistan in the past three decades, seeking better lives and jobs.

Almost a million Afghans also are illegal immigrants in Iran, according to police figures published on Monday.

While some 840,000 Afghans have been able to register as refugees in Iran, many others have lived among Iranians with relative ease for many years, and those permitted to work have been able to seize opportunities in the labour sector.

But as Iran faces its own economic problems, exacerbated by sanctions targeting its vital petrodollar and access to the global banking system, those opportunities have progressively dried up.

"The Afghans allowed to work had been able to help the Iranian economy and also take care of themselves," Egeland said. "But there is now exploding unemployment among Afghans."

Sanctions are designed to coerce Tehran into rolling back its nuclear drive, which Western powers and Israel suspect mask military objectives. Iran says its work is peaceful and has defiantly expanded its activities.

But its economy has gone drastically downhill in the past two years, struggling with rampant inflation of nearly 40 percent, a massive depreciation of the national currency, and a double-digit unemployment rate, according to official figures.

The situation has also led to "increased tension between Iranian local communities and Afghans who have lived well together for years," Egeland said, pointing to rising calls by Iranians for the refugees to return to Afghanistan.

Afghanistan -- whose weak economy is mostly supported by foreign aid -- is unprepared to host a large return of refugees, the NRC chief said, adding that the situation would become even worse once NATO forces depart in 2014.

"We have seen refugees leaving bad conditions here to even worse conditions there," he said.

Circumventing sanctions is costly

His organisation, he added, had been affected by punitive measures overseen by the Office of Foreign Assets Control, a department in the US Treasury, that limit the amount of humanitarian aid that can be transferred into Iran.

"We can transfer a total of $500,000 in a year -- this amount is nothing for us," said Egeland, whose organisation raises around $2 million in funds annually.

The NRC therefore resorts to "cumbersome and costly" alternatives.

Egeland criticised the unintended consequences of the sanctions regime in complicating efforts to provide shelter, food security, information and legal assistance, water and sanitation, and education to the refugees, particularly those living in "very poor conditions ... and in mud huts."

"We live in 2013; there should be a possibility to make a rational and reasonable exemptions to such a sanctions regime," he said.

Iran and world powers clinched a long-elusive nuclear deal last week, which could lead to the lifting of sanctions in the coming years should further negotiations over a final agreement proceed smoothly.

Egeland expressed hope that the deal could lead to exemptions to enable unlimited transfer of aid for humanitarian operations in Iran.

He also called for better cooperation from the government of President Hassan Rouhani, who took office in August.

"We need unhindered access to refugee sites that have so far been denied for various reasons," he said.