Ahmadinejad also said that even the Islamic republic's arch-foe Israel would be unable to do a "damn thing" about Iran's nuclear programme.

He reiterated that as far as Tehran is concerned, the nuclear issue is "over" and said the Islamic republic will "not back down from its rights."

"The Iranian nation will by itself make the 20 percent (nuclear) fuel (enriched uranium) and whatever it needs," the hardliner announced in a speech broadcast live on state television from the central city of Isfahan.

It was unclear whether the cabinet had already taken a formal decision on enriching uranium to 20 percent, as on Sunday Ahmadinejad announced his government would meet on Wednesday to consider such a proposal.

The latest Iranian move directly flies in the face of world powers which object to Tehran enriching uranium since the process lies at the heart of the nuclear controversy.

The material can be used to power a nuclear reactor as well as to make the fissile core of an atomic bomb. Iran denies seeking to acquire nuclear weapons.

Neither Israel -- widely believed to be the sole nuclear-armed power in the Middle East, albeit undeclared -- nor the United States has ruled out military action against Iran over its atomic ambitions.

"The Zionist regime is nothing. Even its masters cannot do a damn thing," Ahmadinejad said on Wednesday, a day after declaring: "Any finger which is about to pull the trigger will be cut off."

He came down heavily on Western powers and Israel in his speech, accusing them of using against Tehran what he said was an Iranian proposal to exchange its low-enriched uranium (LEU) in return for 20 percent enriched material.

"They want to use against us what we proposed ourselves," he said in his speech in the province where Iran's flagship uranium enrichment plant is located in the city of Natanz.

He also said that Iran will build 10 more plants of the size of Natanz.

World powers had backed a proposal brokered by the UN atomic watchdog under which Iran would send most of its LEU to Russia and France for conversion into nuclear fuel for a research reactor in the capital.

But Tehran rejected the proposal last month, insisting that it wanted to hand over its LEU at the same time it receives the 20 percent enriched uranium, and that the handover must take place inside Iran.

Since then tension between Tehran and world powers has heightened as world powers object to Iran enriching uranium on its own, fearing it could divert its stock of LEU to make nuclear weapons.

On Wednesday, Ahmadinejad said Iran was still "willing to cooperate in a fair atmosphere," but its initiative should not be considered as a "concession" to world powers.

"If you want to cooperate, fine... enrich the fuel and bring it inside Iran. We will exchange it under the supervision of the agency," he added of the International Atomic Energy Agency (IAEA).

Iran's long-time nuclear partner Russia has also been talking of backing further sanctions against Tehran if it fails to convince world powers of its intentions.

Tehran is already under three sets of UN Security Council sanctions for failing to halt uranium enrichment at Natanz.

Late on Tuesday, Ahmadinejad lashed out at Moscow for going against Iran in an IAEA vote last week that censured Tehran for building a second uranium enrichment plant.

In his speech on Wednesday he called the IAEA vote "illegal" and said it was influenced by "superficially powerful nations."

Iran is building the new facility deep inside a mountain near the Shiite shrine city of Qom, and disclosure of its existence outraged Western powers.

In a rare tirade against the country building Iran's first nuclear power plant in the Gulf port of Bushehr, and which had also been expected to deliver advanced air-defence missiles to Iran, Ahmadinejad said on Tuesday Russia had been mistaken in its vote at the IAEA.

"Russia made a mistake. It does not have an accurate analysis of today's world situation," he said, and vowed that despite the IAEA vote setback, Western powers would not succeed in isolating Iran.

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