Foreign Minister Manouchehr Mottaki confirmed Iran would deny snap inspectors access to its sites in retaliation for the resolution adopted by the UN’s International Atomic Energy Agency (IAEA).
"This resolution has no legal basis. All it does is simply remove the opportunity for voluntary cooperation between Iran and the agency," he told a news conference.
"All voluntary measures taken over the past two-and-a-half or three years have been halted and we have no further commitment to the additional protocol and other voluntary commitments," Mr Mottaki said.
The additional protocol to the nuclear Non-Proliferation Treaty gives the IAEA stronger inspection powers and is central to the UN watchdog's three-year-old effort to determine what Iran is actually up to.
President Mahmoud Ahmadinejad dismissed the IAEA resolution.
"You can pass as many resolutions as you like and be happy about it, but you cannot stop the progress of the Iranian people. We thank God that our enemies are idiots," he was quoted as saying by Iranian news agencies.
"We don't need you. It is you who need the Iranian people. This is the funniest decision I've seen," said the president, who has steered his country on a collision course with the West since his shock election win last June.
Enrichment fears
Uranium enrichment is a step in the process of making nuclear fuel for reactors, but can also be used to make the fissile core of a nuclear bomb.
Iran has insisted that it only wants to enrich uranium to make reactor fuel. It triggered the latest crisis by resuming uranium conversion activities last August and enrichment research on January 10.
US President George W. Bush, however, said the resolution "is not the end of diplomacy or the IAEA's role" and merely the "beginning of an intensified diplomatic effort".
"This important step sends a clear message to the regime in Iran that the world will not permit the Iranian regime to gain nuclear weapons," Mr Bush said.
Although Iranian retaliation is set to worsen tensions, the Islamic regime also signalled it was ready to press on with negotiations with Russia – which now has a one-month window to talk with Tehran before the Security Council actually takes up the matter.
Moscow's proposal is for enrichment to be carried out on Russian soil in order to allay proliferation concerns whilst at the same time allowing Iran to have nuclear fuel for civilian purposes.
"The second round of talks will go ahead, but the Russian proposal must be adapted to the new situation so that we can examine it," foreign ministry spokesman Hamid Reza Asefi told reporters.
The two sides are scheduled to meet in Moscow on February 16, with Russia keen to reach a negotiated settlement and guard its economic interests – which include a one-billion dollar deal to build Iran's first reactor.
"It is not in our interests to wait for the deterioration of the situation in an already explosive region," Russian Defence Minister Sergei Ivanov said at a security conference in Munich.
"I hope that Iran would accept the Russian proposal," he said. "This proposal is attractive because it will give Iran the full legal right to keep developing its peaceful nuclear energy program. And we will support Iran."
Iran is under massive pressure from elsewhere to comply with the IAEA's demands to return to a moratorium on fuel cycle work, show better cooperation with IAEA inspectors and return to negotiations.
In the IAEA vote, 27 countries including the UN Security Council's permanent five -- Britain, China, France, Russia and the United States – voted in favour and five abstained. Iran's only support came from Cuba, Syria and Venezuela.
Japan also said the resolution was "a clear message to Iran", and called on the Tehran to "take this resolution seriously and respond to it sincerely".
"Iran has still a crucial opportunity between now and the March IAEA Board to comply," said British Foreign Secretary Jack Straw. "Otherwise, decisions by the Security Council are almost inevitable."
And Iran's arch-enemy Israel, believed to possess nuclear weapons, was also watching closely.
Acting Israeli Prime Minister Ehud Olmert said Iran faced a "very expensive price tag if it continues with its plans and tries to enrich fuel in order to realize the option of producing non-conventional weapons."
Israeli fears over Iran have been reinforced by Ahmadinejad's call for the Jewish state to be "wiped off the map" or moved as far away as Alaska.