"Bush should know that our capabilities are much greater than those of the United States," foreign ministry spokesman Hamid Reza Asefi told reporters. "We don't think that the United States will make such a mistake."

Bush, whose country is derided in Iran as the "Great Satan," refused to rule out the use of force against Iran over its resumption of nuclear work, which the United States charges is a cover for efforts to build the bomb.

He said "all options are on the table," in an interview with Israeli television, a line he has used before with regard a potential US response to Iran's nuclear work.

"The use of force is the last option for any president. You know we have used force in the recent past to secure our country," he said in a clear reference to Iraq, which the United States invaded in March 2003.

"I have been willing to do so as a last resort in order to secure the country and provide the opportunity for people to live in free societies," he added.

Europe's "attitude" important

Asefi also warned Europe -- which had been trying to obtain guarantees that Tehran's nuclear programme was peaceful in exchange for expanded trade benefits -- that its attitude would be a key factor in any decision to start up enrichment activities.

"The attitude and the actions of the Europeans in the next few days will be the determining factor," said Asefi.

Iran's decision last week to resume uranium conversion work, which is a precursor to enrichment, was "not negotiable," he added.

Asefi said the Iranian regime had not yet reached a consensus on uranium enrichment, a process which makes fuel for nuclear reactors but can also be the core of an atomic bomb.

At an emergency meeting Thursday, the International Atomic Energy Agency called on Iran to halt the nuclear fuel cycle work and ordered the UN watchdog to report on September 3 on Tehran's compliance with international safeguards.

Germany says no to military option

German Chancellor Gerhard Schröder on Saturday pushed aside the option of using force to contain Iran and its uranium enrichment activities, saying that military options were worthless.

"Let's leave military options aside, we have already seen that they don't amount to anything," Schröder said.

Those sentiments were backed up by Foreign Minister Joschka Fischer.

"Military operations always introduce the risk of unmanageable escalation," Fischer said on the sidelines of an electoral meeting Saturday in Schwerin. "We must again place our bets on diplomatic means."