US President George W Bush today called Iran a "grave national security concern," but said he sought a diplomatic way to cap its nuclear goals.
A hard-line Iranian cleric told a Friday prayers congregation in Tehran earlier that Mr Bush was using the nuclear issue to further his goal of overthrowing the Islamic Republic.
The United Nations Security Council, which has the power to impose sanctions on Iran but is unlikely to do so soon, has begun to tackle Iran's case after the UN nuclear watchdog sent the 15 members a report on Wednesday saying it could not verify that Iran's atomic activities were peaceful.
The five council powers with veto rights were working on a statement they hope the full council can consider next week. The statement is expected to call on Iran to suspend all uranium-enrichment activities.
Mr Bush said US concerns were the result of Iran's stated desire to destroy Israel and Washington's belief that Tehran wants to build nuclear bombs -- something the Iranians deny.
"You begin to see an issue of grave national security concern," Mr Bush told a newspaper group.
"Therefore it's very important for the United States to continue to work with others to solve these issues diplomatically, deal with these threats today," he said.
The Security Council will not rush into sanctions. It is likely first to urge Iran to accept International Atomic Energy Agency demands that it halt all uranium enrichment work.
Iran, which has fought to avoid being taken to the council, suspects Mr Bush is only using the nuclear issue as a pretext.
"Bush talks of regime change or change of its behavior, which is the same. It means no Islamic regime," said senior cleric Ahmad Khatami in a sermon in which he also denounced the European Union as a "puppet of US policies."
US Secretary of State Condoleezza Rice said diplomacy must continue, but Iranian leaders should not be allowed to "play for time."
"It's time that we take this up in the Security Council," she told reporters traveling with her to Chile.
EU foreign policy chief Javier Solana spoke for the first time publicly of possible sanctions against Iran.
"I do not rule out sanctions, but it depends on what kind of sanctions they are," Austria's Der Standarddaily quoted him as saying. "We certainly do not want to hurt the Iranian people."
However, asked if EU foreign ministers meeting in Salzburg, Austria, would discuss the issue, Mr Solana told reporters: "No. We are talking about a gradual approach to give some room still for diplomacy."