  We report the first significant detection of an X-ray cluster associated with
a powerful (L(bol) ~1e47 erg/sec) radio-loud quasar at high redshift (z=1.06).
Diffuse X-ray emission is detected out to ~120 kpc from the CSS quasar 3C 186.
A strong Fe-line emission at the z(rest)=1.06 confirms its thermal nature. We
find that the CSS radio source is highly overpressured with respect to the
thermal cluster medium by ~2-3 orders of magnitude. This provides direct
observational evidence that the radio source is not thermally confined as
posited in the ``frustrated'' scenario for CSS sources. Instead, the radio
source may be young and at an early stage of its evolution. This source
provides the first detection of the AGN in outburst in the center of a cooling
flow cluster. Powerful radio sources are thought to be triggered by the cooling
flows. The evidence for the AGN activity and intermittent outbursts comes from
the X-ray morphology of low redshift clusters, which usually do not harbour
quasars. 3C186 is a young active radio source which can supply the energy into
the cluster and potentially prevent its cooling. We discuss energetics related
to the quasar activity and the cluster cooling flow, and possible feedback
between the evolving radio source and the cluster.
