TEHRAN, October 15 (IslamOnline & News Agencies) - Iran will not oppose a two-state solution to the Middle East conflict if both Palestinians and Israelis agree, the Iranian Foreign Ministry said Tuesday October 15, in a sharp moderation of its long-standing opposition to the Jewish state.

"We believe in a single state (covering all) of (historic) Palestine," said ministry spokesman Hamid-Reza Asefi.

"But if the Palestinians and Israelis agree on another solution -- even though that is not our own position -- we will not oppose it," Asefi told Agence France-Presse (AFP).

Iranian reformers have for some time advocated moderating the Islamic regime's hostility to a two-state solution, if it is accepted by the Palestinians.

But it is the first time that the view has been officially endorsed by the Iranian government.

The reformist-led administration has been keen to ease the Islamic republic's isolation after U.S. President George W. Bush branded it part of an "axis of evil" with Iraq and North Korea by responding to a more conciliatory line from the European Union.

In early July, E.U. governments agreed to open talks on a trade agreement with Iran on condition that it be accompanied by a wider dialogue on politics and human rights.

Last month, an E.U. delegation made clear that European states expected Iran to accept the "necessary existence" of Israel as part of the "integrated package".

It also called on the regime to ratify and implement non-proliferation agreements, protect human rights and cooperate in the war on terrorism.

Initially Iran reacted angrily. "We will not accept any preconditions by the European Union for the expansion of trade ties," Deputy Foreign Minister Ali Ahani told the official news agency IRNA on September 12.

But earlier this month, European diplomats expressed optimism that the talks were on track.