The U.S. military said on Sunday there had been a dramatic drop in the number of Iranian weapons being used in Iraq but no let-up in Tehran's training and financing of Iraqi militias.

Washington has accused Tehran of supplying Shi'ite militias in Iraq with sophisticated weapons, including deadly amour-piercing bombs known as explosively formed penetrators (EFPs), to attack American troops. Tehran denies the charge.

"We do believe that the number of signature weapons that have come from Iran and have been used against coalition and Iraqi security forces are down dramatically," U.S. military spokesman Rear Admiral Greg Smith told reporters in Baghdad.

"We do not think levels of training have been reduced at all. We don't believe levels of financing are reduced."

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His comments come at a time of heightened tensions between Iran and the United States after Washington said its warships were threatened by Iranian craft in the Strait of Hormuz earlier this month. The two countries are already at odds over Iran's determination to pursue a nuclear program.

U.S. officials had softened their rhetoric towards Iran in recent weeks, partly attributing a sharp drop in violence in Iraq since June to Iran stemming the flow of smuggled weapons. U.S. forces also released a number of Iranian detainees.

Smith said there was an upswing in the number of EFP attacks reported in the first two weeks of January.

"There was an increase, we don't know why precisely ... and now they have returned to normal levels," he said. "It is uncertain what is happening inside Iran to lead to that."

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