The defiance came before the UN atomic watchdog meeting in Vienna that is expected to clear the way for possible action against Tehran over suspicions that it is seeking nuclear weapons.

Ali Larijani, the Islamic republic's chief nuclear negotiator, said on Sunday that Iran would not freeze small-scale nuclear fuel work even if referred to the world body.

"Going to the Security Council will certainly not make Iran go back on research and development," Larijani told reporters in Tehran. He said that the Islamic republic would respond to such a move by pressing ahead with full-scale uranium enrichment.

"Going to the Security Council will certainly not make Iran go back on research and development"

Ali Larijani, Iran's chief nuclear negotiator

Larijani said, however, that Iran was not intending to use oil as a weapon in the dispute or quit the nuclear Non-Proliferation Treaty (NPT), but said this could change if the row worsened.

US reaction

The US reaction was quick. A senior official said that Iran faces "tangible and painful consequences" if it continues its nuclear activities and the United States will use "all tools at our disposal" to stop this threat.

The warning was made by John Bolton, the US ambassador to the United Nations, at a convention of Jewish Americans on Sunday.

Bolton has said it is too soon for the UN Security Council to impose sanctions on Iran but other countries are talking about doing so and Washington is "beefing up defensive measures to cope with the Iranian nuclear threat".

"The longer we wait to confront the threat Iran poses, the harder and more intractable it will become to solve," Bolton told the annual convention of the American-Israel Public Affairs Committee.

"The Iran regime must be made aware that if it continues down the path of international isolation, there will be tangible and painful consequences."

"The longer we wait to confront the threat Iran poses, the harder and more intractable it will become to solve"

John Bolton, the US ambassador to the United Nations

He said Iran posed a "comprehensive threat" as a state sponsor of terrorism as well as a nuclear aspirant and so "we must be prepared to rely on comprehensive solutions and use all the tools at our disposal to stop the threat that the Iranian regime poses".

Enrichment right

Iran says it has the right to enrich uranium for nuclear reactor fuel as part of a peaceful energy programme; but the United States and Europe fear that it will use enriched uranium to make atom bombs.

The board of governors of the International Atomic Energy Agency, the UN nuclear watchdog, meets this week in Vienna to consider a report from Mohamed ElBaradei, the agency's chief.

The report says that Iran is defying agency calls to halt enrichment and to co-operate fully with inspectors.

The issue is expected to come up on Tuesday or Wednesday.