"Iran has to realise that there is the possibility of having a different relationship with the Western world but only on the basis of certain very clear things," Blair said in an interview broadcast on Sky News television at 8:00 pm (1900 GMT).

"If they don't do this then I think they should understand it is very difficult for people to have a different relationship with them," Blair said.

"And if they continue to do it, they continue to really defy proper rules of behaviour in the international community, then life will become a lot more difficult."

However Blair attempted to play down fears of military action against Tehran while not excluding it totally.

"People are asking 'are we about to go and invade Iran?' It is important that fear is laid to rest. Nobody is talking about that, nobody is planning for it, nobody is wanting to do it," the British prime minister said.

However Blair added: "You don't ever take any option off the table."

Iran denies allegations by the United States that it has sought to develop nuclear weapons, and insists it needs nuclear energy to replace oil stocks when they run out.

Talks on the nuclear issue between Iran and the so-called EU-3 -- Britain, France and Germany -- broke down in August after Tehran ended a freeze on uranium fuel cycle work.

Earlier this month Iran reiterated its refusal to suspend uranium fuel work, as sought by the three European states as a precondition of resuming talks with Tehran.

The United States and the EU-3 have been lobbying members of the International Atomic Energy Agency (IAEA), the UN's nuclear watchdog, to refer Iran to the UN Security Council over its nuclear activities.

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