Cairo: Efforts by Iran and Egypt to establish diplomatic ties following the ouster of President Hosni Mubarak after a popular uprising against his three-decade rule received a setback with the arrest of an Iranian diplomat suspected of involvement in espionage activities in Egypt.

The Higher State Security Prosecution on Sunday questioned Qassem al-Husseini, who is working at the Iranian Interest Office in Cairo, who was arrested a few days ago.

Initial investigations revealed that Husseini was collecting intelligence information on the latest events in Egypt for Iranian intelligence agencies.

Media reports quoted Iranian officials of denying the charges.

Iran severed full diplomatic relations with Egypt in 1979 when Egypt made peace with Israel and provided asylum to the Shah who was ousted in the Islamic Revolution.

The two nations do not have embassies in each other countries, but maintain a lower-level mission.

After the ouster of Mubarak, Egyptian Foreign Minister Nabil Elaraby said in April that his country was open to re-establishing diplomatic relations.