According to top national security official and nuclear negotiator Hassan Rowhani, Iran will soon decide its next step after being chastised by the UN nuclear watchdog for failing to ease suspicions over its atomic programme.

Rowhani has already suggested Iran could resume uranium enrichment activities, the most sensitive part of the nuclear fuel cycle that the IAEA had demanded be halted pending the conclusion of its inquiry into its programme.

Although officials say resuming enrichment is not in immediate view, other retaliatory measures -- such as resuming the assembly of centrifuges -- do appear to be under consideration.

Many of Iran's hardliners, who cemented their grip on power after they won disputed parliamentary elections in February, want the regime's leadership to take a much tougher line.

On Monday, supreme leader Ayatollah Ali Khamenei said it was essential for the Islamic republic to master the nuclear fuel cycle, but again denied the country was seeking to develop nuclear weapons.

"It is essential because if the Iranian people cannot" produce their own nuclear fuel, "they will be dependent on outside sources and if these countries decide not to supply us, our stations will be useless," Khamenei said in a speech carried on state television.

Measures proposed by some hardliners include pulling out of the nuclear Non-Proliferation Treaty (NPT), refusing to ratify the NPT additional protocol allowing tougher inspections and getting back down to enriching uranium.

Each would provoke a major crisis with the IAEA, which in turn could decide to refer Iran to the UN Security Council for sanction.

"We should continue our peaceful nuclear activities and the Majlis should not ratify the addition to NPT," cleric and hardline MP, Mohammad Reza Faker, told the student news agency ISNA.

"In our discussions with the Europeans and the IAEA, we committed ourselves to suspending enrichment in order to facilitate the job for the Europeans to close Iran's case at the IAEA. But now, as they have not lived up to their part of the deal, it is time to take the country's interest into account and to boldly go forward."

The European Union's "big three", Britain, France and Germany, secured Iranian cooperation in negotiations last year. But by drafting th harsh resolution passed last Friday at the IAEA, they clearly signalled they felt Iran was failing.

Iran insists it has met its commitments and accuses the Europeans of betrayal.

Officials here also contend that mastering the nuclear fuel cycle for peaceful purposes is permitted under the NPT.

"Iran should resume uranium enrichment. This is Iran's right," said another conservative MP, Heshmatollah Falahatpisheh.

"The tone and wording of this resolution is harsher than the previous ones, since they are asking us to reconsider a programme that we have invested so much in."

Another new conservative MP, Ali Abasspour Tehrani, told the Jomhuri Eslami newspaper that "neither the IAEA or any country has the right to restrict any country from pursuing nuclear energy for peaceful purposes."

In addition, the far-right Jomhuri Eslami paper on Monday branded IAEA chief Mohamed ElBaradei "a big liar".

"If the US and the Europeans continue to endanger our national interests, we will take the necessary action," warned Hossien Nejabat, another MP.

"Getting out of the NPT based on a timetable is one option, although Iran is not currently pursuing this," he added.

Alaodin Borujerdi, the new conservative head of the parliament's foreign affairs committee, warned that MPs were unlikely to ratify the additional protocol which Iran signed in December.

Such a step would signal an end to tough UN inspections the regime is currently allowing.

Kayhan newspaper, the mouthpiece of the religious right-wing, said the IAEA was testing the new parliament.

"The (IAEA) board of governors is overtly blackmailing us, therefore it is expected from the majlis to frankly announce their definite decision not to ratify the additional protocol," the paper wrote in an editorial.

WAR.WIRE