Iraqi Prime Minister Nuri al-Maliki said on Wednesday that his government had agreed to extend a year-end deadline for the removal of Iranian dissidents housed in a camp northeast of Baghdad.
Camp Ashraf, which is home to around 3,400 Iranian refugees hostile to the regime in Tehran, is now set to close in April, Maliki said at a news conference in the Iraqi capital.
The camp is controlled by the People's Mujahedeen, which the United States blacklists as a terrorist group.
"The secretary general of the United Nations presented a suggestion for the Iraqi government asking to postpone (the closure)... and we agreed," Maliki told reporters.
The premier told AFP earlier this month that the decision to close the camp was "irreversible", but said a UN proposal to delay its closure was hampered by the refusal of the People's Mujahedeen to meet with a UN representative. The group has disputed Maliki's claims.
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In a statement issued in Paris on Wednesday, the group said its leader Maryam Rajavi was ready to visit Baghdad to hold talks "with the Iraqi government for making the arrangements for implementation of a peaceful resolution of Ashraf."
Former Iraq president Saddam Hussein allowed the rebel People's Mujahedeen to set up the camp when his forces were at war with Iran in the 1980s.
When Saddam was overthrown in the US-led invasion of 2003, the camp came under US military protection but American forces handed over security responsibilities at the site to the Baghdad authorities in January 2009.
The camp has been back in the spotlight since a controversial April raid by Iraqi security forces left at least 34 people dead and scores injured.
The US State Department welcomed Maliki's announcement.
"We're gratified to see that the Iraqi government's going to give it a little bit more time and that they're particularly cooperating well with the UN process," spokeswoman Victoria Nuland said in Washington.