The Iranian embassy in Baghdad says U.S. troops have freed seven Iranians hours after detaining them at a hotel in the Iraqi capital

An embassy official said the men were handed over to Iraqi authorities early Wednesday morning.

American troops raided Baghdad's Sheraton hotel late Tuesday and seized the Iranians. Video footage also showed soldiers leaving the hotel with what appeared to be luggage and a laptop computer bag.

The Iranian embassy said those detained included an embassy staffer and six members of a delegation from Iran's Electricity Ministry.

Earlier Tuesday, President Bush criticized Iranian interference in Iraq and authorized U.S. military commanders to confront what he described as Iran's "murderous activities."

Iran denies supporting insurgents in Iraq.

The U.S. has been holding five other Iranians detained by American forces in January in northern Iraq.

U.S. military officials say the five were helping militants in Iraq fight U.S. and Iraqi forces. Tehran says the men are diplomats and has demanded their release.

On Tuesday, Iranian President Mahmoud Ahmadinejad said a power vacuum is emerging in Iraq and that his government is ready to fill the gap with the help of neighboring states.

Mr. Ahmadinejad pointed to what he called the rapidly declining political power of "the occupiers," an apparent reference to the United States.

Some information for this report was provided by AP and Reuters