"If you feel that we are not respecting your engagements then we will adopt a different policy and the heavy consequences of this policy will burden those who have not respected their engagements," he said in a speech to foreign diplomats, state television reported.

The comments were addressed to the European Union, which has been pressing on with talks in Geneva to persuade Iran to give guarantees it is not developing nuclear weapons and to permanently halt uranium enrichment.

"If the other parties (the Europeans) do not respect their engagements then we will in no way respect ours," he said.

Khatami also lashed out at the United States, which in recent weeks has sharpened its rhetoric against the Islamic Republic and reaffirmed accusations that Iran is trying to develop a nuclear bomb.

"Those who have being thumping the drums of war and have launched psychological warfare against Iran must know that the Iranian people will not allow the aggressors to put one foot on Iranian soil," he said in a clear reference to Washington.

"But if this ever arrives the aggressors will be burned in the hell of the storm of the people's anger," Khatami added.

US President George W. Bush has not ruled out the use of force against Iran while Secretary of State Condoleezza Rice said Wednesday that Tehran should be hauled before the UN Security Council if it fails to reach agreement with the Europeans.

Britain, France and Germany have pushed diplomacy as the solution to the issue, leading an EU initiative to get Iran to dismantle its program to enrich uranium in return for trade, technology and political security incentives.

Iran has suspended the uranium enrichment work, a key part of the nuclear fuel cycle, while the talks continue but has vehemently rejected suggestions from the Europeans that it should halt the process completely.

While Khatami's comments restated Tehran's position that the suspension of enrichment was only a temporary move to show good faith, the tone of his remarks underlined the tensions remaining between the sides.

"If the threats are even just slightly real, then Iran will change its attitude," Khatami said in the speech, which was given to mark the 26th anniversary of the Islamic revolution.

"We will give guarantees that we are not moving towards the construction of a nuclear weapon as it is something that we are against but we will never renounce civilian nuclear technology," he said.

"We believe that enrichment is a very clear right that we will never renounce. We have voluntarily suspended enrichment to show our good faith," he added.

Iran has always insisted that its nuclear programme is for civilian purposes only and its right to enrich uranium is enshrined in international treaties on atomic energy.

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