Baghdad has confirmed plans to build a 100,000-seater stadium, seen as a clear indication of Iraq's intention to make a bid for hosting the 2012 Olympic Games, reports The Independent newspaper.

Officials are reported to have set aside a 1.25sq m site to build Baghdad's Olympic Sports City in the hope that the lure of tract and field can 'over come Western antipathy'.

The Independent says the Foreign Office confirmed that changes to the sanctions regime due on 30 May meant British firms would not be barred from bidding for the project. But government support for the two UK firms understood to have expressed an initial interest is highly unlikely - export credit guarantees, in effect public insurance for British companies working abroad, do not apply to Iraq.