"Today, the Iranian people and the officials of the Islamic republic of Iran, more powerful than before and like steel, will stand against any pressure or conspiracy," a defiant Ayatollah Ali Khamenei said.

He vowed that Iran, "relying on God and using wisdom and rationale and by maintaining unity, will continue on the path to advanced technology, including nuclear technology."

Describing the stand-off as a "matter of destiny" after a quarter of a century of tensions with Washington, Khamenei also urged Iranians to brace for "possible pain and trouble".

The International Atomic Energy Agency on Wednesday opened the way for Security Council action against Iran, which despite its denials is suspected of using an atomic energy drive as a mask for weapons development.

Envoys of Britain, China, France, Russia and the United States -- the five veto-wielding, permanent members of the Council -- have already discussed the issue and could formally take up the case in the course of next week.

Unlike the IAEA, the Security Council has enforcement powers and can impose punitive measures, including sanctions. The aim is to force Iran to abandon uranium enrichment work, which can provide the fuel for civilian reactors but also material for atomic weapons.

"If the Iranian people and the government retreats from its right to nuclear technology, the (American) adventure will not end and the Americans will come up with another pretext," Khamenei said.

"We should stand firm on the matter, and... by enduring possible pain and trouble will be victorious."

Hardline President Mahmoud Ahmadinejad also struck a defiant tone, declaring that "the time for bullying is over" and that the West "can not do a damn thing" against Iran.

"Some powers think that if they sit in a session, they can force the Iranian people to retreat. But all the Iranian nation, young or old, urban dweller or villager and farmer or factory worker are all saying one thing: nuclear energy is our undeniable right," he said.

Although Tehran has proposed suspending industrial-scale enrichment, it is refusing to halt enrichment research -- but the Western powers argue that even this would allow the clerical regime to acquire nuclear weapons know-how.

"Iran will not give up its right to research and development," senior national security official Abdol Reza Rahmani-Fazli, the deputy of top Iranian negotiator Ali Larijani, told state media.

"The Islamic Republic of Iran is ready to cooperate with the IAEA in order to achieve its rights, but will not accept the politicisation of the nuclear case," he said.

Iran's Assembly of Experts, an 86-member council of top clerics, also issued a statement warning the country's opponents of a "heavy price" if tensions escalate further. The previous day, another Iranian official also threatened the US with "harm and pain".

The only voice of dissent was from reformist president Mohammad Khatami, who warned the country could face "great problems".

IAEA director Mohamed ElBaradei has said a political settlement is possible, and urged all sides to "lower the rhetoric" to achieve this.

US Secretary of State Condoleezza Rice warned Thursday Iran had become the focus of US action on the world stage as she sought Congress' backing for a package to promote democracy in the Islamic republic.

"We may face no greater challenge from a single country than from Iran, whose policies are directed at developing a Middle East that would be 180 degrees different than the Middle East we would like to see develop," Rice told the Senate Appropriations Committee.

Meanwhile, Russian Foreign Minister Sergei Lavrov told Russian television that President George W. Bush had assured him of Washington's "prudence" in handling the affair during their meeting in Washington Tuesday.

"When... I met President Bush he told me explicitly that on future action over Iran it was necessary to be very prudent," he told Rossia television in Moscow.

Moscow has been trying to broker a compromise under which Iran could enrich uranium in Russia. Beijing has also advocated a negotiated solution.

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