"The army and armed forces must be more ready with each passing day," he told the forces outside the shrine of Iran's revolutionary founder Ayatollah Ruhollah Khomeini.

Meanwhile, Iran's oil minister refused to rule out using oil as a weapon in the standoff with the West over its nuclear programme, saying that Tehran would use every means if attacked.

"The Islamic Republic of Iran's policy is to supply energy as a responsibility. We are never seeking to cut the energy supplies to the world," Kazem Vaziri-Hamaneh told an energy conference in Tehran.

"But naturally every country, which is subject to danger or attack, should use all its possibilities to defend itself and this is every country's right," he said.

Analysts have said that Tehran could cause oil prices to surge if it cut off the Strait of Hormuz, a key shipping channel, which would trigger a massive disruption in global supplies.

The United States has refused to rule out the option of military action to force Iran to halt its atomic drive which Washington suspects is aimed at making weapons. Iran insists that its nuclear programme is peaceful.

Iran's repeated refusal to suspend sensitive uranium enrichment operations has already brought two sets of UN sanctions targeting its ballistics and nuclear industries.

The military parade in Tehran showed off regiment after regiment of ground forces, tanks, a new set of drones as well as medium-range Nazeat (Meteor) missiles one of which was inscribed "Death to Israel".

However, Iran's longer-range ballistic missiles, which are under the control of the Revolutionary Guards, were not on display and there was no sign of any hitherto unknown weaponry.

"They think that with sanctions on our weapons we would be paralysed but we have succeeded in producing all we need in arms," said Ahmadinejad in the brief address.

In the military parade, Iran showed off a succession of drones with names like Oqab (Eagle), Sayad (Hunter) and Azarakhsh (Thunderbolt) which it said were able to confront "any aerial or ground threat by the enemy."

Also on display were Zelzal-2 (Quake) missiles which are said to have a range of 100 to 400 kilometres (60 to 250 miles) and Nazeat missiles which have a range of around 100 kilometres.

Other units taking part in the parade included a regiment of motorcyclists with shoulder-launched missiles as well as divers equipped with aqualungs on top of their mini-submarines.

Ahmadinejad said that despite the standoff over its nuclear programme, Iran wanted to have friendly relations with all countries, with the exception of Israel which it refuses to recognise.

"Our people hold out the hand of friendship to all the peoples. We want friendly and just relations with all the peoples except the Zionist regime," he said.

Ahmadinejad, who returned briefly to Tehran for the parade from a continuing trip to the southern Fars province, has repeatedly insisted that Iran has no intention of giving in to Western demands over its nuclear drive.

Iran has defiantly announced that its uranium enrichment activities have reached an industrial scale although Western observers stay there is still uncertainty over what stage its nuclear programme has in fact reached.

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