We report the discovery of narrow Fe XXV and Fe XXVI K alpha X-ray absorption lines at 6.65 and 6.95 keV in the persistent emission of the dipping low-mass X-ray binary (LMXB) XB 1916-053 during an XMM-Newton observation performed in September 2002. In addition, there is marginal evidence for absorption features at 1.48 keV, 2.67 kev, 7.82 keV and 8.29 keV consistent with Mg XII, S XVI, Ni XXVII K alpha and Fe XXVI K beta transitions, respectively. Such absorption lines from highly ionized ions are now observed in a number of high inclination (ie. close to edge-on) LMXBs, such as XB 1916-053, where the inclination is estimated to be between 60-80 degrees. This, together with the lack of any orbital phase dependence of the features (except during dips), suggests that the highly ionized plasma responsible for the absorption lines is located in a cylindrical geometry around the compact object. Using the ratio of Fe XXV and Fe XXVI column densities, we estimate the photo-ionization parameter of the absorbing material to be 10^{3.92} erg cm s^{-1}. Only the Fe XXV line is observed during dipping intervals and the upper-limits to the Fe XXVI column density are consistent with a decrease in the amount of ionization during dipping intervals. This implies the presence of cooler material in the line of sight during dipping. We also report the discovery of a 0.98 keV absorption edge in the persistent emission spectrum. The edge energy decreases to 0.87 keV during deep dipping intervals. The detected feature may result from edges of moderately ionized Ne and/or Fe with the average ionization level decreasing from persistent emission to deep dipping. This is again consistent with the presence of cooler material in the line of sight during dipping.
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