Iran will not accept any suspension of its sensitive nuclear activities, Foreign Minister Manouchehr Mottaki said on Tuesday, urging world powers to accept the "new reality" of its industrial uranium enrichment.

Iran said on Tuesday it is still seeking to hugely expand its nuclear programme by installing 50,000 uranium-enriching centrifuges at a nuclear plant after announcing its atomic drive had entered an industrial phase.

Iran said on Monday it could now enrich uranium on an industrial scale but did not disclose how many centrifuges it had now installed at the Natanz plant in central Iran to enrich uranium.

Aghazadeh said he did not disclose at a ceremony on Monday the number of centrifuges Iran has installed at a massive underground facility in Natanz as he did not want to "create ambiguities" about Iran's objectives.

President Mahmoud Ahmadinejad used a high profile speech at Iran's main nuclear site to announce that the country had succeeded in setting up an "industrial scale" operation to enrich uranium.

Iran has already been hit with two sets of UN sanctions for refusing to suspend its reprocessing work, which the West fears is aimed at producing nuclear weapons but Tehran insists is only designed to make fuel for atomic power stations.

Experts suggested Iran's latest act of defiance could provide the basis for a face-saving resolution of the crisis when European and Iranian negotiators meet again in coming weeks.

But the US responded sharply to Ahdaminejad's statement, saying Iran's continued defiance would lead to tougher sanctions against the Islamic regime. The last sanctions resolution adopted on March 24 set a 60-day deadline for Iran's compliance.

State Department spokesman Sean McCormack said the Iranians were "almost completely encircled by the international community because of their actions, and that pressure is only going to increase if they persist."

McCormack declined to "prejudge" specific actions Washington would seek in addition to financial and other UN sanctions already targeting Iran's nuclear and ballistic missile programs.

McCormack however also held out the option of a "negotiated pathway" through the crisis which would involve Western nations providing Iran with aid and other incentives -- including help developing a civilian nuclear power industry -- if Tehran suspends its uranium enrichment program.

Talks between the European Union's foreign policy chief, Javier Solana, and Iran's chief nuclear negotiator, Ali Larijani, are due to resume soon, though no dates have been announced, McCormack said.

Some experts expressed doubt Monday that the Iranians had actually begun to enrich uranium with their larger array of centrifuges for fear of torpedoing the new round of negotiations.

PHOTO CAPTION

Iranian Foreign Minister Manouchehr Mottaki speaks to members of the media about the U.N. Security Council in New York March 25, 2007. (Reuters)