But Ahmadinejad also accused the West of using the International Atomic Energy Agency (IAEA) as a "mask of peace to confront [Iran] and stop its advancement".

"Negotiations in an atmosphere of threat are not something that any free person would accept. The Iranian nation has always been ready for negotiations," he said.

US response

Washington said it did not see Ahmadinejad's word's as a rebuff to US overtures to Iran.

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"We do not attribute any particular meaning, with respect to the range of issues that we are looking to address with the Iranians, from this particular statement," Hillary Clinton, the US secretary of state, said.

"We don't know what to believe about the Iranian programme. We've heard many different assessments and claims over a number of years."

In his speech, Ahmadinejad said that Iran's nuclear project was only aimed at producing electricity, but that the West was seizing on it as an excuse for aggression.

'Posturing and campaigning'

Mehran Kamrava, the director of the Centre for International and Regional Studies at Georgetown University in Doha, told Al Jazeera that Ahmadinejad's speech was given with an eye to Iran's upcoming elections.

"On the one hand he is posturing and campaigning - although he has officially not yet announced that he's going to run for re-election - [and] on the other hand, he is also trying to position Iran, and the Iranian presidency in particular, for dialogue and negotiations with the Americans," he said.

Gholam Reza Aghazadeh, Iran's atomic chief, declared Iran was in the last stages of testing "two new kinds" of nuclear centrifuges with higher capacity and also installed about 7,000 others at the Natanz uranium enrichment facility.

The new facility will produce uranium fuel for a planned heavy-water nuclear reactor, but western powers fear that the reactor could eventually be used for producing a nuclear weapon.

The plant will produce pellets of uranium oxide to fuel the heavy-water research reactor, which is scheduled to be completed by 2010.