Brinkmanship by Iran continues
Mohamed ElBaradei, head of the International Atomic Energy Agency (IAEA), also said that Iran was still stalling inquiries into its nuclear work. He also confirmed Iran's boast this month that it had mastered uranium enrichment to the low level suitable in power plants. His damning report was sent to the UN Security Council, which could impose sanctions.
George Bush, the US president, said he wanted peaceful persuasion to prevail in the confrontation.
"It's very important for the Iranians to understand there is a common desire by a lot of nations in this world to convince them, peacefully convince them, that they ought to give up their weapons ambitions," said Mr Bush, who added that he would keep consulting the United States' allies on the issue.
Britain said it would ask the Security Council to increase pressure on Iran after the IAEA report. China's UN ambassador, Wang Guangya, said almost all council members wanted a diplomatic solution to the Iran crisis. "There are a lot of problems in the region and we should not do anything that would cause the situation to become even more complicated," he said when asked if Beijing would now back sanctions.
Iran, refusing to blink, oozed defiance. The country's hardline president, Mahmoud Ahmadinejad, declared hours before the report's release that the Islamic Republic would shun UN calls to limit its nuclear programme.
"Those who want to prevent Iranians from obtaining their right should know that we do not give a damn about such resolutions," he told a rally in north-west Iran. Threats and "psychological warfare" against Iran would fail, he insisted. "Whether our enemies like it or not, Iran is a nuclear state. Obtaining nuclear technology is a national demand."
The rhetoric from Tehran has become more strident in recent days with threats to cut oil production, ban nuclear inspectors and withdraw from the Nuclear Non-Proliferation Treaty.
But western diplomats in Tehran expect no rash response from Iran after Mr ElBaradei's report and say there is still time for Tehran to back-pedal. "They often take things to the brink," one envoy told The Scotsman, predicting that Iran would wait to see how events unfold at the UN Security Council.
The next move there is expected to be an attempt by western powers to make mandatory last month's demand that Iran suspend uranium enrichment, but without threatening sanctions.
If Iran ignores the resolution, they could then push for a warning coupled with a deadline for compliance, while also promising help for a civil power programme if Tehran gives up enrichment. If the Security Council fails to agree on the way ahead, Iran faces the threat of economic sanctions by the US and a "coalition of the willing".
Iran has calculated that the Security Council is too divided to agree on punitive action, and that the US is too bogged down in Iraq to be a potent military threat, analysts believe.
Russia and China are opposed in particular to any so-called "Chapter 7 resolution" sought by the US that would designate Iran a threat to international security, a step that would open the door to sanctions and eventually even military action.
Iran insists that its nuclear programme is solely for generating electricity.