The weapons fired in the Gulf by the naval section of the Revolutionary Guards included shore-to-sea, surface-to-surface and sea-to-air missiles, state television said. No details were given on the names of the missiles.

 

It said the war games also included the firing of the Hoot (Whale) torpedo that Iran unveiled in April 2006 and which it says is a super-fast weapon capable of hitting enemy submarines.

 

Iran on Wednesday test-fired its Shahab-3 longer range missile, whose range includes Israel and US bases in the Gulf, and eight other more medium range missiles.

 

The move sparked major concern in Western governments which say they fear Iran's nuclear drive is aimed at making atomic weapons, a charge that Tehran vehemently denies.

 

In a separate night-time land exercise late on Wednesday, the military also fired "longer and medium range missiles" state television said. Pictures broadcast showed several missiles being fired into the night sky.

 

Images were also broadcast of the naval manoeuvres, showing divers fixing mines to a pier, missiles fired from shore-based mobile launchers to the sea and the Hoot speeding towards a target.

 

The United States and its regional ally Israel has never ruled out military action against Iranian atomic facilities, while Tehran has warned of a fierce response if it is attacked.

 

After a warning from an aide to supreme leader Ayatollah Ali Khamenei that Iran would "set fire" to Israel and US ships in the Gulf if it was attacked, US Secretary Condoleezza Rice warned that the United States would defend itself.

 

"We will defend American interests and the interests of our allies. We take very strongly our obligation to defend our allies and we intend to do that," she told reporters in Tbilisi.

 

There has been concern an attack against Iran could be imminent after it emerged that Israel had carried out manoeuvres in Greece that were effectively dry runs for a potential strike against Iranian nuclear facilities.

 

But US Defence Secretary Robert Gates played down the risks of conflict. "The reality is there is a lot of signalling going on, but everybody recognises what the consequences of any kind of a conflict would be," he said.

 

The chief of French energy giant Total Christophe de Margerie said it was too politically risky to invest in Iran at present, as Western governments lean on firms to cut their ties with the Islamic republic.

 

His remarks appear to spell the end of Total's involvement in a deal to exploit the phase 11 of Iran's giant South Pars gas field to produce liquefied natural gas (LNG) for export and to build a liquefaction plant.

 

"Today we would be taking too much political risk to invest in Iran because people will say: 'Total will do anything for money'," de Margerie told the Financial Times.

 

The news is likely to be a major blow for Iran, which is in dire need of foreign investment to develop its largely untapped gas reserves and realise its ambition of becoming a major gas exporter.

 

The war games come in the midst of increased diplomatic efforts to end the five-year standoff over the Iranian nuclear drive.

 

Iran has responded to an offer from world powers to end the crisis, and diplomats are analysing what is said to be a complex answer from Tehran.

 

EU foreign policy chief Javier Solana is expected to hold talks with top Iranian nuclear negotiator Saeed Jalili on the latest proposals by the end of the month, Solana's spokeswoman said.

 

The offer proposes that Iran suspend uranium enrichment -- the key sticking point in the crisis and the process which the West fears could be used to make a nuclear weapon -- in exchange for technological incentives.

 

However, France says Iran does not say in its response that it is prepared to suspend uranium enrichment.

 

 

An Iranian Shahab-3 missile