Iran threatened on Friday to end surprise inspections and other co-operation with the UN nuclear watchdog if it were referred to the Security Council over its nuclear programme, and the Iranian president said his country would not be intimidated by sanctions.
Bush, speaking at a news conference in Washington DC with Angela Merkel, the German chancellor, said: "I'm not going to prejudge what the United Nations Security Council should do.
"But I recognise that it's logical that a country which has rejected diplomatic entreaties be sent to the United Nations Security Council."
In turn, Merkel said Western countries would "not be intimidated" by Iran's decision to go ahead with its nuclear programme.
Tehran raised the stakes in its dispute with the West this week by removing UN seals on equipment that purifies uranium, which can be used for power, or if highly enriched, in bombs.
The US and the EU's three biggest powers - Britain, France, and Germany - said talks with Iran on the issue were at a dead end.
After her official meeting with Bush, Merkel said: "It's essential, we feel, that the EU-3, together with the United States, take a common position here, become active."
Tehran denies accusations that it is seeking nuclear weapons and says it needs nuclear technology to generate electricity. Iran is the world's fourth-biggest oil exporter.
Manouchehr Mottaki, the Iranian foreign minister, said bringing Iran before the Security Council would have "consequences" for the West and Tehran would have to "end all of its voluntary measures" in response.
Mottaki said the West could face
consequences if action was taken
Iran has repeatedly threatened to end snap checks and resume uranium enrichment if taken to the council.
Iran's co-operation with snap UN inspections is voluntary, but halting them would reduce its co-operation with the UN nuclear watchdog to the legal minimum.
But Aliasghar Soltaniyeh, Iran's new representative to the International Atomic Energy Agency in Vienna, said Tehran remained "fully committed" to the nuclear Non-Proliferation Treaty and its statutory obligations to the IAEA.
On Friday, Wang Guangya, China's UN ambassador, said Beijing feared that taking the case to the council "might complicate the issue" and could harden the positions of some parties.
China has considerable economic relations with Tehran and imported 12% of its crude oil from Iran in the first 11 months of 2005. It traditionally opposes sanctions, saying they are a violation of other countries' internal affairs.
Russia, for its part, will go ahead with a $1 billion deal to sell short-range missiles to Iran despite the nuclear dispute, Sergei Ivanov, the Russian defence minister, said.
Ivanov said Russia will still sell
short-range missiles to Iran
He said Moscow's proposal to enrich uranium for Iran on Russian soil - a compromise rejected by Tehran but seen by the West as an option to defuse the crisis - was still on the table.
Bush noted on Friday that the US and other nations had "made it abundantly clear" to Tehran that developing nuclear capabilities or weapons was not acceptable.
"And the reason it's unacceptable is because Iran armed with a nuclear weapon represents a grave threat to the security of the world," he said.
He pointed out that Mahmoud Ahmadinejad, the Iranian president, had only recently declared that the destruction of Israel was an important part of his agenda.
The board of the IAEA, which has found no firm proof that Iran is seeking nuclear arms, is expected to meet early next month to consider referring Iran to the Security Council.
In the past, Russia and China have opposed this.
At the UN headquarters in New York, Emyr Jones Parry, Britain's envoy, said: "We have a very serious situation with Iran.
"This is not a dispute between the EU-3 and Iran. It is the interest of the international community as a whole"
Emyr Jones Parry,
Britain's UN ambassador
"This is not a dispute between the EU-3 and Iran. It is the interest of the international community as a whole.
"What is our interest, it is to get Iran to comply with the wishes of the [IAEA] governing board. Once it's done that and gone back into an understanding with the governing board, if it's prepared to enter into negotiations, we would welcome that."
He said the EU-3 had made a substantial offer of economic incentives to coax Tehran into renouncing a nuclear weapons capability, but said this was predicated on Iranian compliance with its IAEA obligations.
"The onus of that rests very firmly with Iran," he said.
Also on Friday, a leading British politician said Iran should be expelled from the football World Cup for resuming its nuclear programme.
Michael Ancram, a Conservative MP, said exclusion from football's biggest tournament "would give a very, very clear signal to Iran that the international community will not accept what they are doing".
Israeli officials said on Friday they remained hopeful that concerted international diplomacy could end the crisis, but that a military strike against Iranian nuclear facilities - led by others - was possible.
"Either they [Iran] totally cease their nuclear weapons programme or they endanger their relationships with the entire organised international community"
Israeli Foreign Ministry spokesman
Mark Regev, the Israeli foreign ministry spokesman, said Iran should be presented with a clear choice: "Either they totally cease their nuclear weapons programme or they endanger their relationships with the entire organised international community.
"We believe the combination of fanatical ideology together with nuclear weaponry is a combination that no thinking person can feel comfortable with."