TEHRAN -- Iran and North Korea have agreed to step up bilateral contacts, an Iranian news agency said on Friday, signalling closer ties between two countries which were part of U.S. President George W. Bush's "axis of evil".

Iran's Foreign Minister Manoucher Mottaki signed the agreement with visiting North Korean Vice Foreign Minister Kim Yong-il on Thursday evening, the student news agency ISNA said.

Iranian President Mahmoud Ahmadinejad's government "is interested in expanding ties with North Korea in the political, economical and cultural fields," Mottaki was quoted as saying.

"Therefore it is necessary to remove some barriers to provide and recognize new fields of cooperation," he said, suggesting North Korea's debt to Iran was one such barrier without giving details.

Under Thursday' accord, the foreign ministries of the two countries would every year send delegations to each other to "exchange ideas" over different international issues.