Addressing an international meeting in Baghdad, he did not name any particular country. But the US accuses both Iran and Syria of stoking the violence.

The talks bring envoys from all three together for the first time in years. Soon after they started, a car bomb killed 18 people in the Sadr City area of the capital, officials said. About 40 people were injured.

At about the same time, at least two mortar shells landed near the conference venue but injured no one, a witness said.

The one-day conference on ways to restore stability in Iraq is being attended by envoys from other members of the UN Security Council, the Arab League, the Gulf Cooperation Council as well as other states bordering Iraq.

Observers say it is seen as an attempt to break the ice and the beginning of a process. It is hoped the next step will be a meeting of foreign ministers in April.

Iraqi sources said the Americans shook hands with the Iranian and Syrian envoys but there were no reports of separate bilateral discussions.

For Iraq the meeting is seen as an important opportunity to bring together neighbours and other powers who have often seemed to be using the country as a proxy battlefield for their own struggles.

The conference venue is just outside the fortified Green Zone. A key focus will be reducing violence stemming from Iraq's Sunni-Shia divide.

In his opening address, Iraqi prime minister Nouri Maliki called terrorism "an international epidemic" for which the people of Iraq were paying the price.

"Iraq is the first front line in facing this terrorism - which needs a lot of international cooperation to confront it - especially the neighbouring countries in particular to support us in this great war, " he said.

Iran is a key supporter of the Shia majority in Iraq, while Saudi Arabia and other Sunni Arab states would like to see a better deal for Iraq's Sunni minority. Ahead of the talks, US president George W Bush, on a Latin American tour, said the US message to Syria and Iran was unchanged.

"We expect you to help this young democracy and we will defend ourselves and the people in Iraq from weapons being shipped, " he said.

The conference comes amid a new security drive by US and Iraqi forces. Bush has ordered in more than 20,000 additional troops to try to quell the unrest in the country.