"We need always to remember that use of force could only be resorted to when ... every other option has been exhausted," he said.
"There is a UN charter and there are rules for the international use of force."
France has been trying to encourage the European Union to back new sanctions against Iran, outside of the UN Security Council, to pressure Tehran to give up its nuclear ambitions.
"The countries that feel threatened ... should prepare for defense, and even counterattack"
Adolfo Talpalar, Stockholm, Sweden
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Iranian leaders have insisted Tehran only wants to use nuclear technology to produce electricity.
Following Kouchner's remarks, Mahmoud Ahmadinejad, the Iranian president, reiterated his commitment to developing atomic energy.
"Of course we will not step back," said Ahmadinejad in an interview with Jam-e Jam, Iran's Farsi language international television channel, in response to a question by a viewer.
"The West are talking about imposing sanctions on us. But they cannot do this," he said.
Later, Reza Aghazadeh, Iran's vice-president, told delegates from the IAEA's 144 member states that Western countries "have always chosen the path of confrontation instead of the path of understanding and cordial relations toward the great nation of Iran".
Iran has yet to comply with repeated UN demands that it suspend uranium enrichment and other sensitive work that could potentially be used in producing weapons.
"We must negotiate right to the end [with Iran]," the French minister said, but underlined that if Tehran possessed an atomic weapon, it would represent "a real danger for the whole world".
Calling the nuclear standoff "the greatest crisis" of present times, Kouchner said: "We will not accept that the bomb is manufactured ..." and hinted that military plans were being developed.
"We are trying to put in place plans which are the privilege of chiefs of staff and that is not for tomorrow," he said, but stressed any attack on Iran was far from taking place.
"We have decided to ... prepare ourselves for possible sanctions outside the UN sanctions and which would be European sanctions.
"Our German friends proposed it. We discussed it a few days ago," Kouchner said. 'Martial rhetoric'
Maxime Verhagen, the Dutch foreign minister, backed Kouchner's call for sanctions on Monday, but Austria and Germany took exception to his talk of war.
|Iran has insisted that its nuclear facilities|
are for producing electricity [File: EPA]
"I can't comprehend why he is resorting to such martial rhetoric at this time," Ursula Plassnik, Austrian foreign minister, said at the meeting of the IAEA in Vienna.
While Martin Jaeger, German foreign ministry spokesman, said: "It's not right to talk of threats of war."
Francois Fillon, the French prime minister, also tried to soften the aggressive language on Monday, insisting that there was still room for diplomacy.
"The Iranians must understand that tension has reached an extreme point," he said, while adding that "a confrontation with Iran is the last option that any political leader would want".
The five permanent Security Council members - Britain, China, France, Russia and the US - plus Germany are due to meet to discuss a new draft UN resolution on sanctions against Iran on September 21 in Washington.
Dr Mehran Kamrawa from the Georgetown University in Qatar told Al Jazeera that the tough language would make any return to negotiations unlikely.
"The Iranians and the European Union plus the United States have backed themselves into a corner respectively with their very harsh rhetoric," he said.
"The rhetoric coming from the French foreign minister only makes the situation of negotiations less likely because its creates a situation whereby the Iranians are unable to go to the negotiating table because it looks like they are surrendering to European demands."
Kouchner's comments follow a similar statement by Nicolas Sarkozy, the French president.
He said last month in his first major foreign policy speech since taking office that a diplomatic push by the world's powers was the only alternative to "an Iranian bomb or the bombing of Iran".
Kouchner went to Iraq last month to raise France's profile there and smooth over relations with Washington after disagreeing with the Bush administration's decision to invade Iraq.
Sarkozy is seen as taking a tougher line on Iran than his predecessor, Jacques Chirac, and is also seen as being far more friendly to the US.
The US has said it has not ruled out using military strikes against Iran and Robert Gates, the US defence secretary, said on Sunday that "all options are on the table".