In his latest anti-Israeli assault, Mahmoud Ahmadinejad dismissed the Holocaust as a "myth" and said the Jewish state should be moved as far away as Alaska -- views that one European envoy posted in Tehran described as "way beyond political incorrectness".

"At first, we were tempted to put it down to inexperience or a simple gaffe," he said of the firebrand president's string of outbursts, which began in October with a call for Israel to be "wiped off the map".

"But there is now a clear pattern of confrontational, extremist rhetoric apparently designed to upset the international community. And he's succeeding," said the European diplomat, who asked not to be named.

According to the diplomat, "the very radical change of tone in Iran has to be seen in the context of the nuclear issue" -- or fears that Iran is using an atomic energy drive as a cover for weapons development.

"This kind of talk from the president is not confidence-building, this is confidence destroying. It undermines all the diplomatic efforts to find a mutually satisfactory compromise on a very serious issue. You can't help but feel pessimistic."

Since his shock election win in June, the president has vowed to restore "revolutionary" values, has purged state institutions of moderates and adopted a more confrontational approach in nuclear negotiations with the European Union.

The president -- a veteran of the Iran's ideological army the Revolutionary Guards -- has also revealed a deeply religious side.

He claimed to have been surrounded by an "aura" when he spoke at the UN General Assembly in September and has voiced hope for the imminent return of Shiite Islam's 12th Imam -- who disappeared in the year 873 AD -- to save the world.

"Call him what you like, but you cannot doubt his sincerity. He's a true revolutionary, a true believer who's on a mission from God," said another Western diplomat based in Tehran.

"The man is bursting with confidence, and it's like he's saying to Ariel Sharon: 'Go ahead, make my day'. If it goes on like this, it'll end in tears," he said, referring to Israel's premier.

According to Saeed Leylaz, an Iranian political analyst, Ahmadinejad is quite simply "looking for confrontation".

"It reinforces his position, because he knows these kind of remarks are welcomed by the working classes in Iran and the Muslim and Arab world. Western public opinion is of no concern to him," Leylaz said.

But other analysts say that ultimately, the real power still rests with Iran's supreme leader Ayatollah Ali Khamenei and that the Islamic republic's complex power structure could -- as it has done in the past with both hardliners and reformists -- return to some form of equilibrium.

"Iran has been in a transitional phase since the elections," an Asian diplomat told AFP.

"I think we have to be very careful not to let one man push things out of hand, even if Ahmadinejad is reinforcing the Israeli and American position and there is only a limited window for the nuclear diplomacy."

On Tuesday, Israel's chief of staff Dan Halutz claimed Tehran would have all the necessary knowledge to build a warhead within three months, and some Israeli figures and reports have also pointed to the possibility of a pre-emptive military attack against Iran.

Despite all his fiery rhetoric, Ahmadinejad insists Iran's nuclear drive is merely aimed at generating electricity.

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