The US military officials have cut ties with former US-favored Iraqi politician, Ahmad Chalabi over his alleged relations with Iran.

The US military and civilian officials have accused Chalabi for unauthorized contacts with the Islamic Republic, an allegation the Iraqi politician denies, sources told NBC News.

Chalabi had been making a remarkable comeback in Iraq, but that may now be in jeopardy, American officials told NBC News on condition of anonymity.

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The FBI once sought to question him over allegations that secret US codes had been passed to Iran, sources say.

Meanwhile a spokesman for Chalabi, Mohammed Hussein Al-Moussawi, told NBC News that "Chalabi's relations with the government of Iran are strictly diplomatic and in compliance with Iraqi government standards."

Washington accuses Tehran of destabilizing Iraq by 'funding, training, arming and directing' Iraqi insurgents.

Tehran, however, has rejected the allegations, stating that the US failure in war-torn Iraq is the cause of the country's instability.

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