President Mahmoud Ahmadinejad said Iran must move away from dependence on oil revenue to overcome Western sanctions that have slowed the economy and disrupted foreign trade.
"We have to change the flow of wealth and capital into the country. Problems will remain as long as this doesn't change... 25 percent of the gross national product is concentrated in Tehran. We need to make sure that the money is invested not just in one city but all over the country," Ahmedinejad said.
Speaking to lawmakers, Ahmadinejad said "enemies" are using the weak points in Iran's economy to pressure the country.
Many Iranian officials have described the Islamic Republic's reliance on crude oil exports as a weakness, but Ahmadinejad's call before parliament highlights a political desire to broaden Iran's economy. It also represents the first major acknowledgment by Ahmadinejad that the economic squeeze from sanctions demands "structural changes" in Iran's industries and exports.
Ahmadinejad also said Iran must further cut government subsidies on energy, which give Iranians some of the cheapest fuel in the world. Parliament has opposed the move.
Tehran had long counted on crude oil sales as the backbone of the nation's economy, accounting for about 80 percent of foreign currency income.
But Western sanctions over Iran's nuclear program have targeted oil exports and shut Iran out of the international banking system, making it hard for its remaining customers in Asia and elsewhere to pay.
In a clear admission of the blow from sanctions, Gholam Reza Kateb, the head of the parliament's budget committee, said Iran's revenues from oil and gas exports have dropped by 45 percent. Iranian authorities have accused the West of waging an "economic war."
Iran's Supreme Leader Ayatollah Ali Khamenei insisted sanctions will not succeed.
"The arrogance front [the US and its allies] have employed all their might to force the Iranian nation through sanctions and pressures to surrender. But this nation will tolerate the hardships because it has recognised enemy plans, tactics and strategy," Khamenei said on Wednesday, according to Iranian state television.
The US and its allies fear Iran may ultimately be able to develop nuclear weapons.
Tehran denies the charges, saying its nuclear program is peaceful and aimed at generating electricity and producing radioisotopes to treat cancer patients.