The surprise invitation, extended Sunday by the secretary-general, set off a flurry of diplomatic activity to salvage the talks aimed at ending Syria's ruinous three-year civil war.
The U.S. had insisted the offer should be rescinded and the main Western-backed Syrian opposition group threatened to skip the event entirely.
The invitation was withdrawn shortly after Iran's U.N. ambassador declared the Islamic Republic wouldn't join the Syria talks if required to accept the roadmap sketched during a 2012 Geneva conference on Syria.
A spokesman for Ban, Martin Nesirky, said senior Iranian officials had assured Ban that Iran understood the terms of his invitation.
"The Secretary-General is deeply disappointed by Iranian public statements today that are not at all consistent with that stated commitment," Nesirky said.
"He continues to urge Iran to join the global consensus behind the Geneva Communiqué.
The peace conference is set to begin Wednesday in the Swiss luxury resort city of Montreux, with high-ranking delegations from the United States, Russia and close to 40 other countries attending. Face-to-face negotiations between the Syrian government and its opponents - the first of the uprising - are to start Friday in Geneva.
But the uproar over Iran's invitation threatened to scuttle the entire event.
One of the issues with Iran's participation revolved around the 2012 Geneva roadmap, CBS News correspondent Margaret Brennan reported. The Geneva roadmap is the premise for the scheduled peace talks and it calls for a political transition in Syria. Iran's U.N. ambassador indicated earlier Monday his government would not participate in the talks if accepting that precondition was necessary.
Additionally, U.S. official said that Iran has done nothing to de-escalate sectarian tensions in Syria. In fact, many blame the Islamic republic for escalating problems on the ground in part by sending uniformed military personnel and mobilized foreign militias to fight in Syria.
After the initial invitation to Iran was extended, the Syrian National Coalition issued an ultimatum, saying that Iran must commit publicly within hours to withdraw its "troops and militias" from Syria and abide by a 2012 roadmap to establish a transitional government. Otherwise, the group said, the U.N. should withdraw its invitation for Tehran to take part.
The coalition, which had voted late Saturday to attend after months of rancorous debate, said if those conditions are not met by 7 p.m. GMT Monday, it would not attend the talks.
But Hadi Bahra, a member of the coalition's political committee, said the group was willing to be flexible, to a degree, with its deadline.
"If there are serious efforts and commitment, then it will be extended, but for sure not beyond midnight," he told The Associated Press.
It is not clear what exactly motivated Ban to issue the invitation, but it came hours after he said he had received assurances from Tehran that it accepted the premise of the talks - to establish a transitional government with full executive powers in Syria, which has been ruled by President Bashar Assad's family since 1970.
Iran is Assad's strongest regional ally and has supplied his government with advisers, money and materiel since the Syrian uprising began in 2011. The Islamic Republic's allies, most notably the Lebanese Shiite militant group Hezbollah, have also gone to Syria to help bolster Assad's forces.
The last-minute decision appeared to take the U.S. and its European allies by surprise. An Iranian statement said Iran had accepted the invitation "without accepting any pre-conditions."
The negotiations aim to broker a political resolution to a conflict that has killed more than 130,000 people, displaced millions and put entire towns and neighborhoods under military siege in the worst humanitarian crisis in decades.
Diplomats and political leaders acknowledge that the prospects of achieving such a lofty goal any time soon are slim at best - with the opposition riveted by internal divisions. Infighting between rebels in northern Syria has killed more than 1,000 people in the past month.
Both the government and the opposition have suffered enormous losses, but even now, neither side appears desperate enough to budge from its entrenched position. At this point, just getting the antagonists into the same room to start what is expected to be a long process that could drag on for years would be perceived as a success.
Invitations to the one-day meeting of foreign ministers had been subject to approval by the initiating states, Russia and the United States, but the two countries had been at an impasse over Iran.
Syria's crisis began in the heyday of the Arab Spring uprisings that swept away authoritarian leaders in Egypt, Tunisia and Yemen. Unlike the others, Syria's leadership responded to largely peaceful protests for political reform with a withering crackdown. That slowly forced the opposition to take up arms and gave birth to a civil war that has also spawned a proxy battle between regional Shiite Muslim power Iran and Sunni heavyweight Saudi Arabia.
The cumulative effect of the war has been disastrous. Syria lies in ruins, its economy shattered, its rich social fabric shredded.
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