Condoleezza Rice intimated a softening of the Bush Administration's stance towards Syria today when she met the country's Foreign Minister on the sidelines of a conference called to discuss the rebuilding of Iraq.

The US Secretary of State ducked into a private meeting with Walid al-Moualem on the first day of the two-day conference, at which America and Iraq are trying to muster support from 50 nations, chiefly in the Arab world, for reconstruction and debt relief to the war-ravaged country.

Ms Rice's meeting with Mr al-Moualem is the first high-level contact between Washington and Damascus for several years. America withdrew its ambassador to Syria after the assassination of Rafik Hariri, the former Lebanese Prime Minister, in Beirut in February 2005.

Since then the Bush Administration has accused Syria of funding terrorism, meddling in Lebanese domestic politics and providing extensive support for Hezbollah, the Shia militant group that fought a war with Israel last summer. Syria is also accused of failing to secure its border with Iraq and allowing the funnelling of weapons, finance and fighters into the west of the country, where hundreds of American soldiers have died.

But the shunning of Syria has been questioned by critics of America's strategy in Iraq. One of the key recommendations of the Iraq Study Group's report on the conflict was that Washington engage Iran and Syria in efforts to bring stability to the country. Until now, that recommendation had been ignored. Only last month President Bush criticised the Democratic Speaker of the House, Nancy Pelosi, for meeting the Syrian leader, President Bashar al-Assad, saying she was sending "mixed signals" to the country.

A US State Department official said Ms Rice and Mr al-Moallem were expected to talk about “Iraqi security issues” in their meeting. As expectations mounted this morning that the two would talk, a US military spokesman in Baghdad said that Syria had helped bring down the number of fighters crossing the border in the last month.

"There has been some movement by the Syrians,” said Major General William Caldwell. “There has been a reduction in the flow of foreign fighters into Iraq."

Iran has also been invited to the reconstruction conference, raising expectations that Ms Rice -- who is under pressure from Iraq to improve Washington's relations with Tehran -- might also meet her Iranian counterpart, Manouchehr Mottaki. So far, however, their contact has been limited to pleasantries over lunch. “They said hello, that’s about it,” said a US State Department spokesman.

At the opening of the conference, which is being held in Sharm el-Sheikh, an Egyptian resort on the Red Sea, Iraq's Prime Minister, Nouri al-Maliki asked the invited nations to forgive his country's international debt, which is believed to amount to $50 billion (£25 billion). A further $100 billion (£50 billion) of debt was already written off by the so-called Paris club of lender nations in November 2004.

“We call on all the friends and brothers participating in this conference to forgive Iraq all its debts in order to enable it to start the projects,” said Mr al-Maliki. Reports at the conference said that Saudi Arabia has already agreed to forgive 80 per cent of the $17 billion (£8.5 billion) it is owed by Baghdad. Should Congress pass the latest US spending bill for Iraq, America will have spent more than $550 billion (£275 billion) fighting and rebuilding the country since 2003.

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