Hasan Kazemi Qomi, Tehran's ambassador, said his government backed Iraqi Prime Minister Nuri al-Maliki's policy of hunting down "outlaws" but was against the American military's way of executing the policy.
"No government should allow outlaws. We are encouraging the government to fight the outlaws. But we are against the way the Americans are implementing the policy by bombing and closing down Sadr City," Qomi told reporters.
"In this way people are suffering. The wrong policy of Americans by bombing innocent people will yield bad results."
For the past two weeks, Sadr City has been the site of intense clashes between militiamen of hardline cleric Moqtada al-Sadr's Mahdi Army and Iraqi and US forces.
The US military has carried out dozens of air strikes in the sprawling district of some two million people.
The US military says "criminals" are firing rockets and mortars towards the heavily fortified Green Zone, the seat of the Iraqi government and the US embassy.
It also claims that many of the militiamen belong to "Special Groups" that are being trained, funded and armed by Iranian-based groups.
