Ayatollah Ali Khamenei, who has the final say on major policy issues, said Iran would pursue its nuclear plans.

"The Islamic Republic of Iran has made its decision and, in the issue of nuclear energy, will continue its path powerfully ... and it will receive the sweet fruits of its efforts," state television quoted him as saying.

Khamenei did not mention uranium enrichment by name but senior Iranian officials, including the deputy head of Iran's Atomic Energy Organisation, have said in recent days that it will not be stopped. 

"Considering the technical advancement of Iranian scientists, the suspension of uranium enrichment is not possible any more," Mohammad Saeedi told Iran's Fars news agency.

Saeedi said Iran would formally reply on Tuesday to a package of incentives offered in return for an end to enrichment.

But diplomats and UN officials told The Associated Press that Iran had turned away International Atomic Energy Agency inspectors from an underground site meant to shelter its uranium enrichment programme from attack.

Incentives package

The United States, Russia, China, Britain, France and Germany presented the package in June, offering Iran economic and other incentives if it first halted uranium enrichment, a process that could have both military and civilian uses.
   
Washington has called on the United Nations to move swiftly to impose sanctions against Iran if it refuses to stop nuclear enrichment activities by the August 31 deadline set by the security council.
  
George Bush, the US president, said: "There must be consequences if people thumb their nose at the United Nations security council. We will work with people on the security council to achieve that objective."

US conspiracy

Khamenei dismissed the US position as a conspiracy against the Islamic world. "Arrogant powers, led by the United States, are fearful of progress of Islamic countries in various dimensions," he said.

Iran has suggested it will not give a simple "Yes" or "No" to the package but said the reply would be "multi-dimensional".

A nuclear official said Iran would submit a "comprehensive written response" to the offer.

The world's fourth largest oil exporter has insisted it has the right to enrich uranium under the Non-Proliferation Treaty and said it will use the technology to produce electricity.