Saudi Foreign Minister Saud al-Faisal acknowledged at a news conference with Powell that preliminary discussions on the subject had been conducted but he gave no further details. Powell declined comment on the issue.
Saudi Arabia's role in the negotiations was unclear because Saudi troops would not be in a Muslim force, consistent with Iraqi wishes that none of the neighboring countries take part.
Some of the countries mentioned as possible participants in a replacement force are Malaysia, Algeria, Bangladesh, Indonesia and Morocco.
A senior State Department official, speaking on condition of anonymity, said the United States is interested in the idea. He offered no further comment except to say that any Muslim force that goes to Iraq would serve as a supplement to the U.S.-led coalition force.
Powell is planning a meeting here Thursday with Iraqi Prime Minister Iyad Allawi. It was unclear whether Allawi was taking part in Wednesday's discussions.
Saudi officials also confirmed that the kingdom is normalizing relations with Iraq for the first time since the Iraqi invasion of Kuwait in 1990.
It was understood that Iraq's preference is that no neighboring country provide troops to the coalition or to the proposed supplemental force in order to avoid possible complications in regional politics.
The United States has been worried about defections from the coalition forces already in Iraq. Membership has declined from 36 nations to 31. During a visit Tuesday to Hungary, Powell stressed the need for the coalition to remain intact, lest despotic rule return to Iraq.
A month ago, the U.N. Security Council approved a resolution that offered a measure of legitimacy to the interim government. But no government since then has publicly stepped forward to offer troops to the coalition force, which now numbers about 160,000 troops.
Powell is on the third leg of a weeklong visit to Central Europe and the Middle East. He flew here from Egypt Wednesday and met with King Fahd, Crown Prince Abdullah and al-Faisal.
The news conference began 90 minutes late and discussions on the possible replacement force resumed afterward.
At the news conference, Powell reaffirmed that the United States remained steadfast in its determination to assist Iraq as it attempts the difficult transition to democracy.
"We will not waver," Powell said, even in the face of the "horrible murders" that continue to be carried out by insurgents.