Among the key appointments submitted to parliament for approval, Ahmadinejad proposed Ali Saidloo as oil minister of the OPEC member, and conservative MP Manoushehr Mottaki as foreign minister.

Saidloo, Ahmadinejad's successor as mayor of Tehran, is a relative unknown in national Iranian politics, while Mottaki has served as ambassador to Japan and Turkey.

Iran bluntly told US President George W. Bush that it would respond to any attack, and warned that it could consider ending a freeze on uranium enrichment, a process that can make fuel for a nuclear bomb.

"Bush should know that our capabilities are much greater than those of the United States," foreign ministry spokesman Hamid Reza Asefi told reporters. "We don't think that the United States will make such a mistake."

The US president on Friday refused to rule out the use of force against Iran over its resumption of limited nuclear activities last week, saying "all options are on the table."

His stance was also opposed by Germany, one of the three European countries which have been negotiating with Iran over its nuclear work, with Chancellor Gerhard Schroeder saying military options "don't amount to anything."

But fellow negotiator Britain, the United States' closest ally, faced anger in Tehran over its role in the talks, with some Islamist students pelting the embassy with stones and tomatoes.

"We must occupy the embassy and get rid of the English spies," chanted the crowd of demonstrators.

The standoff between Iran and the West reached crisis point last week when a Tehran defiantly resumed uranium conversion, the initial stage in the nuclear fuel cycle, despite international warnings.

The International Atomic Energy Agency's board subsequently called on Iran to halt the work and ordered the UN watchdog to report back on September 3 on Tehran's compliance with international safeguards.

But the IAEA, which has been investigating Iran for more than two years after determining it had hidden nuclear activities over two decades, stopped short of referring the dossier to the UN Security Council, which could impose sanctions.

Asefi said the resumption of uranium conversion work at a facility in the central city of Isfahan, which converts uranium ore into feed gas used in enrichment, was "not negotiable".

He said the Iranian regime had not yet reached a consensus on enrichment, a process which makes fuel for nuclear reactors but can also be the core of an atomic bomb.

"But the attitude and the actions of the Europeans in the next few days will be the determining factor," he said.

Iran had suspended its nuclear activities in November for the duration of negotiations with the so-called EU-3 of Britain, France and Germany over its nuclear programme.

But it ended the freeze on conversion after rejecting as "unacceptable" a package of trade, security and technology incentives from the European Union in return for guarantees that its nuclear programme is purely peaceful.

Iran vehemently denies it is seeking the bomb and says it has the right to nuclear technology under the Non-Proliferation Treaty of which it is a signatory.

The nuclear issue is likely to dominate Ahmedinejad's new 21-member government, which was presented to parliament on Sunday ahead of a confidence vote due to be held within a week.

Ahmadinejad, who won a shock election victory in June, has promised a "government of moderation" although his opponents have portrayed him as an extremist.

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