In an assertive speech to the UN General Assembly on Saturday, Ahmadinejad accused the United States of violating global nuclear treaties.
He called for the formation of a United Nations committee to investigate, among other things, which powers had given Israel the technology to develop nuclear weapons in a speech that threw down the gauntlet to the US and its chief EU partners on the issue, Britain, France and Germany.
The president said his country had the inalienable right to produce nuclear fuel.
"We're not going to cave in to the excessive demands of
certain powers," Ahmadinejad later on Saturday told a news conference when asked if Iran would halt sensitive activities such as uranium ore conversion - a precursor to making enriched fuel.
The president said Iran proposed to involve foreign firms in its uranium enrichment programme as a confidence-building measure to end a standoff over its suspected nuclear weapons programme.
In his much-anticipated address, Ahmadinejad said: "As a further confidence-building measure and in order to provide the greatest degree of transparency, the Islamic Republic of Iran is prepared to engage in serious partnership with private and public sectors of other countries in the implementation of uranium enrichment programme in Iran."
"We're not going to cave in to the excessive demands of certain powers"
He said Iran wanted South Africa to join negotiations to resolve the crisis over Tehran's nuclear programme, noting Pretoria's active role in the International Atomic Energy Agency's board of governors.
But Ahmadinejad also warned: "If some try to impose their will on the Iranian people through resort to a language of force and threaten with Iran, we will reconsider our entire approach to the nuclear issue."
He further proposed that the UN General Assembly create an ad hoc committee to study and report on "possible practical measures and strategies for complete disarmament".
Tough US stance
US Secretary of State Condoleezza Rice urged the United Nations to be tough with Iran over its nuclear ambitions and said the Security Council must act when diplomacy was exhausted.
Rice has been in New York for most of the week, holding meetings with key foreign leaders on the sidelines of a UN summit to try and persuade them to act against Iran.
Ahmadinejad (L) suggested
South Africa join nuclear talks
Rice on Saturday said there was time for diplomacy and that Tehran must resume nuclear talks that broke down last month with the Europeans.
Tehran insists its atomic programme is for civilian energy purposes, but the US and some other Western countries say it is intended to build nuclear weapons.
"It (the United Nations) must be able to deal with great challenges like terrorism and nuclear proliferation, especially when countries like Iran threaten the effectiveness of the global non-proliferation regime," said Rice in her first speech to the UN General Assembly.
"When diplomacy has been exhausted, the Security Council must become involved," Rice added.
The Vienna-based International Atomic Energy Agency is to consider on Monday whether to refer Iran to the UN Security Council for possible sanctions, a move the US has been pushing for.
Leaders at the UN World Summit
endorsed moderate changes
Rice's spokesman quoted her as saying it was up to the Iranians to take the initiative and return to nuclear talks with Germany, France and Britain, which have taken the lead on negotiations.
"Yes, there is still time for diplomacy, but it's up to the Iranians to seize the opportunity," State Department spokesman Sean McCormack said.
A prepared version of Rice's speech had included harsher language about Tehran, describing it as a "leading state sponsor of terrorism" whose nuclear ambitions threatened peace hopes in the Middle East.
Rice used her speech to stress the need to reform the United Nations and equip the world body to tackle problems such as terrorism, weapons proliferation, pandemic disease and trafficking in human beings.
"For this institution to become an engine of change in the 21st century, it must now change itself. The United Nations must launch a lasting revolution of reform," said Rice.
World leaders on Friday endorsed moderate reforms of the world body at the end of a 60th anniversary summit that made limited progress on fighting poverty and terrorism, boosting security or protecting human rights.
Secretary-General Kofi Annan
opened the three-day summit
The US has been among the most vocal critics of the UN, which many in Congress see as bloated and inefficient, particularly after revelations of corruption and mismanagement of the UN-run Iraq oil-for-food programme and a sex abuse scandal involving peacekeepers.
Rice said that the US was open to expanding the UN Security Council and that Washington had long supported a permanent seat for Japan, although it repeatedly has sought delays in moves to enlarge the 15-nation council.