Iran on Sunday called for an end to the fighting between arch-foes Armenia and Azerbaijan and said it was ready to facilitate talks and a ceasefire between its two neighbours.

Iran "is closely following the military conflict between the republics of Azerbaijan and Armenia with concern," foreign ministry spokesman Saeed Khatibzadeh said in a statement.

Tehran is ready "to use all of its capacities to establish ceasefire and start talks between the two sides", he said and called for "an immediate end to the conflict".

Fighting broke earlier Sunday between Azerbaijan and Armenian separatists claiming military and civilian casualties on both sides, including at least one child.

The clashes, the worst since 2016, have raised fears of a new war between the two countries which have been locked for decades in a territorial dispute over the Armenia-backed breakaway region of Nagorny Karabakh.

Ethnic Armenian separatists seized the region from Baku in a 1990s war that claimed 30,000 lives.

Peace talks have been largely stalled since a 1994 ceasefire agreement, with the last big push for a peace deal collapsing in 2010.

Iran has an Azeri-speaking community of over ten million as well as an Armenian community of just under 100,000.