Present-day US fears about an Iranian-dominated super-state embracing southern Iraq and the Gulf have a basis in historical fact, according to an exhibition charting the exploits of Cyrus the Great, founder of the Persian empire, which opens at the British Museum on Friday.

Cyrus and his successors, Xerxes and Darius, created the world's first superpower in 550BC, ruling territories from central Asia and the Indus valley to Arabia and north Africa. But the Persian kings appear to have had better luck in Iraq than President George Bush has had.

When Persian forces overran Babylonia in 539BC, the inhabitants surrendered peacefully. According to contemporary accounts, Cyrus was greeted as a liberator because of his just policies - and tough attitude to terrorists.

"When I entered Babylon I did not allow anyone to terrorise the land," a text known as the Cyrus Cylinder quotes him as saying. "I strove for peace in Babylon and all other sacred cities. I put an end to the inhabitants' misfortune."

John Curtis, the curator of the exhibition, Forgotten Empire: the World of Ancient Persia, said: "Cyrus was no despot, more an enlightened autocrat. He was surprisingly tolerant. He made no attempt to establish a state religion. He is said to have freed the Jews from captivity, allowing them to return to Jerusalem."

There are other historical echoes for modern-day empires to ponder. Even the poorest subject had the right to a royal audience, Mr Curtis said. The Persians developed an early form of federalism, governing through client rulers and provincial governors, known as satraps. Darius built a canal linking the Nile to the Red Sea - a forerunner of the Suez canal; introduced the first dollar-like global currency, the darik, and tax and communications systems; and created an empire-wide postal service whose "we always deliver" motto and emblem were supposedly imitated more than 2,000 years later by the US Mail and Pony Express.

Technologically, the Persian military machine was state of the art. Its elite troops were known as the Immortals, equivalent to US special forces. And pre-emptive wars and regime change were all in a day's work for the great kings.

The pre-Islamic Achaemenid dynasty was toppled by Alexander the Great, who burned the great palaces of Persepolis, some of whose surviving artefacts are on show for the first time at the British Museum. But its influence was long-lasting, Mr Curtis said. Christianity, Judaism and Islam were all influenced to a discernible extent by the original Zoroastrian concept, adopted by Mr Bush's "war on terror", of perpetual struggle between good and evil.

Despite the aspersions of Greek historians, the Persians' political, administrative, cultural and artistic legacy formed "a linear link" via the Greeks and Romans to subsequent European and north American civilisation, he added.

"It was very advanced, very sophisticated, progressive and tolerant, although not democratic," Mr Curtis said. "It was the largest empire at that time."

The organisers say the exhibition "challenges the myths that have portrayed the Persians as despotic and ruthless people" and aims to promote greater understanding of the Middle East, where modern Iran is seen, at least in the west, as a potential threat.

An Iranian diplomat admitted that Tehran's image, tarnished by anti-western ayatollahs, US hostility and nuclear tensions which may climax later this month, could be better.

"There is a lot of ignorance about Iran," the diplomat said. "We hope that the exhibition will give a different perspective."