Papers found Saturday by journalists working for the Sunday Telegraph reveal that an al Qaeda envoy met with officials in Baghdad in March 1998, the newspaper reported.
The paper quoted an unidentified Western intelligence official as saying the find was "sensational."
The paper said the documents show that the purpose of the meeting was to establish a relationship between Baghdad and al Qaeda based on their mutual hatred of the United States and Saudi Arabia.
The meeting went so well that it was extended by a week and ended with arrangements being discussed for bin Laden to visit Baghdad, the newspaper said.
Journalists found a three-page file on bin Laden inside a folder lying in the rubble of one of the rooms of the intelligence headquarters, the paper said.
"Iraqi agents at some point clumsily attempted to mask out all references to bin Laden, using white correcting fluid," the newspaper reported. "After carefully removing the dried fluid, however, the name is clearly legible three times in the documents."
One of the pages, dated Feb. 19, was marked "top secret and urgent" and referred to plans for the trip from Sudan of the unnamed envoy, who is described in the file as a trusted confidant of bin Laden's, the paper said.
The document, signed, "MDA," which the newspaper said is a code name believed to belong to the director of one of the Iraqi intelligence sections, said the Iraqis sought to pay for the envoy's costs while in Iraq "to gain the knowledge of the message from bin Laden and to convey to his envoy an oral message from us to bin Laden."
The message to bin Laden "would relate to the future of our relationship with him, bin Laden, and to achieve a direct meeting with him," the newspaper quoted the document as saying.
The other documents confirm that the envoy traveled from Khartoum in Sudan to Baghdad in March 1998 and that he stayed at the al-Mansour Melia hotel.
The documents do not mention whether any meeting took place between bin Laden and Iraqi officials, the newspaper said.
Separately, The Sunday Times reported that its own journalists had found documents in the Iraqi foreign ministry that indicate that France gave Saddam Hussein's regime regular reports on its dealings with American officials.
The newspaper said the documents reveal that Paris shared with Baghdad the contents of private transatlantic meetings and diplomatic traffic from Washington.
One document, dated Sept. 25, 2001, from Iraqi foreign minister Naji Sabri to Saddam's palace, was based on a briefing from the French ambassador in Baghdad and covered talks between presidents Jacques Chirac and George W. Bush.