Plans to set up a South Africa-style Truth and Reconciliation Commission for Iraq could be scuppered by a row between the Pentagon and the State Department over how to try war criminals and members of Saddam Hussein's regime suspected of human rights atrocities.

Exiled Iraqi lawyers and international human rights activists flew to Kuwait from Britain this weekend to meet US and British army officials to discuss the plans before travelling to Iraq to help re-establish the rule of law.

The Transitional Justice Project in Iraq was set up by the Iraqi Jurists Association, a group of exiled lawyers, and Indict, a British-based human rights group set up seven years ago to pave the way for an International Criminal Tribunal for Iraq.

The project is sponsored by the State Department, which is keen to establish the tribunal on Iraqi soil and staff it with Iraqi lawyers and officials. The Pentagon is known to prefer a military tribunal model, under which suspects would be tried by the US army and major figures from the regime would be flown out of the country for questioning.