Iraq accused Kuwait Friday of falsely accusing it of involvement in a sea battle near the gulf island of Bubiyan to justify the long-term presence of U.S. forces in the emirate.

Iraq suggested that infiltrators from Iran landed on the Kuwaiti island, which dominates Iraq's only outlet to the gulf."(Kuwait's ruling) al-Sabah family is fanning the rumor of Iraq's armed attack on Bubiyan to put Kuwait under Washington's trusteeship and keep American forces in the region to safeguard the family's interests," the Iraqi news agency quoted the defense ministry newspaper al-Qadissiyah as saying.

Kuwait complained to the United Nations' Security Council Wednesday that 80 Iraqis backed by naval vessels had landed on Bubiyan in the most serious incursion since the gulf war ended.

It said that Kuwaiti coast guard and air force destroyed seven vessels while the others fled and more than 40 Iraqis were arrested.

Wednesday's clash was described by Britain as the most serious violation so far of the gulf war cease-fire and the State Department in Washington said it was concerned by the reports. Egypt and some gulf states denounced the incident.

Western security sources in Kuwait told Reuters the clash began after Kuwaiti coast guard stopped five fishing boats and found that they were carrying ammunition from the island left over from the gulf war.

They said Iraqi gunboats and speedboats attempted to cover the fishing vessels' retreat but the Kuwaiti air force engaged the gunboats and at least one was sunk.