"We do not see that the United States is in a position to impose another crisis in the region on its taxpayers," Foreign Minister Manouchehr Mottaki told reporters. "The current situation has cost them a lot."

"But the Islamic Republic of Iran has prepared for two scenarios. We prefer the second which is based on dialogue and constructive interaction," he added at a news conference with visiting Bahrain Foreign Minister Sheikh Khaled bin Ahmad al-Khalifa.

Mottaki was responding to Cheney's comments in Australia earlier that Washington favours a diplomatic approach to Tehran's atomic programme but that "all options are still on the table."

Meanwhile the head of the elite Revolutionary Guards, Yahya Rahim Safavi, vowed that Iran's "armed forces will stand against any foreign threats with power and a high defensive capability," the official IRNA news agency said.

The United States accuses Iran of seeking nuclear weapons, a charge vehemently denied by Tehran which says it solely wants to provide nuclear energy for its population.

The UN's atomic energy agency has confirmed that Tehran is still carrying out sensitive uranium enrichment work at a nuclear plant in defiance of the UN Security Council, opening the way for further sanctions against Iran.

High-ranking diplomats from the Security Council's five permanent members plus Germany will meet in London on Monday to discuss further measures against Tehran.

Mottaki called on the parties meeting in London to "take a brave decision and resume their negotiations with Iran because it is to the benefit of all people.

"As we have said before, our activity is transparent and peaceful. A brave and logical decision can become a solution for this matter and could also start international cooperation," he added.

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