Az-Zaman quoted Iraqi counter-intelligence sources as saying that fighters were being trained in Lebanon under MOIS supervision and sent via the Iranian border to infiltrate Basra.
Some of the fighters were being incorporated into the al-Hussein Battalion which has been responsible for numerous targeted killings and assassinations in Basra.
The daily quoted the sources as saying that the MOIS was the most powerful and influential intelligence service that had infiltrated Basra and several other key Iraqi cities including the holy cities of Najaf and Karbala.
In Basra alone it has eight large intelligence bases, it said, adding that the bases were operating under various guises.
Among the responsibilities the MOIS has in Iraq is to train and arm extremist militias for attacks on targets designated by Tehran.
Other responsibilities include gathering intelligence about large institutions and their political affiliations and pressuring heads of government departments and institutions to take positions in defence of Irans actions in Basra, Karbala, and Najaf, it said.
The report said that Tehran had put aside a billion dollars from state funds for meddling in Iraq.
Irans Islamic Revolutionary Guards Corps (IRGC) was involved in oil smuggling in Iraq, it said, adding that the IRGC and the MOIS were jointly conducting the operation from a command headquarters in the Iranian border town of Ahwaz.
