Kuwait has seized assets of Iraq's national airline in Jordan, Iraqi officials said on Saturday, the latest step in a row between the neighbouring states over war reparations.

Iraqi Airways has filed an appeal against the decision in Jordan, said Karim Al-Nuri, a media adviser to the Iraqi Transportation Ministry.

He said Kuwaiti authorities seized the Iraqi Airways office in the Jordanian capital after obtaining a ruling from a court there.

'Two days ago, the Iraqi Airways' office in Amman has been seized (by Kuwait) and $1.5 million of its assets have been frozen,' Nuri told Reuters by telephone.

Kuwaiti officials could not be reached for comment.

Baghdad and Kuwait have been locked in a long-running dispute over billions of dollars in reparations from Iraq, including some $1.2 billion related to aircraft and parts seized during former dictator Saddam Hussein's invasion of Kuwait.

The dispute is between Kuwait Airways Corp and Iraqi Airways, both of which are state owned.

'This a serious step, and it will legitimise unacceptable mistakes in the future,' Al-Nuri said, adding that Iraqi Airways will continue flying to Jordan despite the freeze.

Last year, Kuwait tried to seize one of the Iraqi carrier's planes in London after obtaining a High Court order against Iraqi Airways that including freezing its assets worldwide. The airline has halted flights to Britain and Sweden under threat that its planes would be seized by Kuwait.

'Unfortunately, so far talks with the Kuwaiti authorities have failed to resolve this issue,' said Nasir Al-Amiri, an advisor for the Iraqi Transportation Ministry. 'We cannot see a solution on the horizon.'

In May last year, Iraq's government said it would dissolve Iraqi Airways over the next three years and pursue private options to dodge asset claims made by Kuwait over their 1990-91 war. – Reuters