"Iran's development of ballistic missiles is contrary to United Nations Security Council resolutions and completely inconsistent with Iran's obligations to the world," said White House spokesman Gordon Johndroe.

Johndroe said the United States and its partners in talks with Iran over its suspect nuclear program "are committed to a diplomatic path" and to "generous" rewards if the Islamic republic freezes its uranium enrichment activities.

"Iran should also refrain from further missile tests if they truly seek to gain the trust of the world. The Iranian regime should stop the development of ballistic missiles, which could be used as a delivery vehicle for a potential nuclear weapon, immediately," the spokesman said in a statement.

He spoke after Iran said it had test-fired a new generation of surface-to-surface missile that has a range similar to the existing Shahab-3 which can reach arch-enemy Israel and even southern Europe.

"The defense ministry's experts ... succeeded in testing a new generation of ground-to-ground missile," Defense Minister Mostafa Mohammad Najjar was quoted as saying by the Fars news agency.

State television broadcast the launch of a missile similar in size to the Shahab-3.

At the Pentagon, spokesman Bryan Whitman said: "I can't confirm the launch but it is consistent with the fact that they continue to develop a ballistic missile program that poses a threat to its neighbors in the region and beyond."

Whitman told AFP that the United States believes "Iran is developing an extended version of the Shahab-3 that could strike our allies and our friends from the Middle East as well as Southeastern Europe."

"This testing is another reminder of the importance of establishing a missile defense site in Poland and in the Czech Republic to defend the US and Europe against a threat that is developing in Iran," he said.

"The Iranian regime only furthers the isolation of the Iranian people from the international community when it engages in this sort of activity," said Johndroe.

In the past, Iran has often boasted of developing new weapons systems only to be met with scepticism from Western defense analysts.

While the Shahab-3 can reach parts of southern Europe it poses the greatest threat to points in the Middle East including Israel and US military bases in the region.

The United States and a number of its allies, including Israel, fear that Tehran is using its civilian nuclear programme as a cover for developing atomic weapons.

Iran insists it wants to develop nuclear power for civilian purposes only in the knowledge that its huge oil and gas reserves will eventually run out.

The United States and Israel have said they want to resolve the issue diplomatically, but have refused to rule out the use of force.

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