"If we're unable to make progress with the Iranians, we want to work together to implement new sanctions through the United Nations," Bush told a joint press conference with British Prime Minister Tony Blair.

The United States and Britain would "continue to make it clear that Iran with a nuclear weapon is not in the interest of peace in the world," Bush said as Blair made his final White House visit as prime minister.

Shortly after Bush spoke, a senior Iranian official told the semi-official news agency Mehr Thursday that Iran installing 3,000 centrifuges at its uranium enrichment facility at Natanz, which could allow it to process enough nuclear material to build one atomic bomb per year.

"Iran is in the process of installing 3,000 centrifuges at Natanz and currently has 1,600 centrifuges working," said Abdolreza Rahmani Fazli, the deputy to top nuclear negotiator Ali Larijani.

The United Nations has already adopted two resolutions imposing sanctions on Iran for defying calls to halt its sensitive uranium enrichment work. Tehran denies Washington's charge that it seeks nuclear weapons.

In March, the UN Security Council gave Iran a further 60 days to suspend enrichment or face further punitive measures, with the latest deadline set to expire next week.

The UN nuclear watchdog, the International Atomic Energy Agency (IAEA), is also to issue a May 23 report on Tehran's nuclear work which could lead to further sanctions.

Asked to comment on Fazli's comments, White House national security spokesman Gordon Johndroe replied: "We are waiting for the latest report from the IAEA, but unfortunately all signs are pointing towards additional discussions at the UN about more sanctions."

Last week US Vice President Dick Cheney visited the Middle East seeking support for curbing Iran's regional influence, and for Arab backing for a third UN resolution that may already be in the drafting stages, a top aide said.

"We've got another Security Council resolution that I think is being worked right now at a level by our bureaucracy," the senior Cheney aide told reporters on condition he not be named.

The United States, other permanent council members, and Germany, are "looking at whether or not a third resolution would be required," the aide said, one day before Cheney left for Iraq, the United Arab Emirates, Saudi Arabia, Egypt and Jordan.

Cheney later warned Tehran from a US aircraft carrier roughly 240 kilometers (150 miles) from Iran's shores that the United States would "stand with others to prevent Iran from gaining nuclear weapons and dominating this region."

But Bush, who declared that "it's important for us to continue to work in the international arena to speak with one voice," spoke as cracks were beginning to show in international unity over sanctions.

European allies have begun to question the usefulness of pursuing sanctions.

If the strategy fails to produce clear-cut results within the next few months "it will be necessary to ask how we go forward," said one diplomatic source who did not rule out military action.

Officially, France, Great Britain and Germany are on record as rejecting military action against Tehran, and Russia and China are even more emphatic in opposing force -- an option which Washington does not rule out.

The issue was likely to come up at a meeting in Germany at the end of month of global finance chiefs.

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