Tehran risks sanctions if it fails by August 31 to abide by a UN Security Council resolution calling for a halt to uranium enrichment, a process which creates fuel for nuclear power plants but can also be used to make the core of a bomb.
Iran is due to respond on August 22 to a package of incentives offered by major powers in return for a freeze in enrichment, amid Western fears its nuclear program is a cover for efforts to build atomic weapons.
But foreign ministry spokesman Hamid Reza Asefi told reporters: "The issue of suspension means returning to the past. It is not on the agenda of the Islamic republic of Iran”.
"The resolution is of no legal and lawful validity. Therefore, it is unacceptable for the Islamic republic,” he said.
"It (sanctions) would be more harmful to them (the West) than for us. We have been under informal sanctions since the 1979 Islamic revolution and we can deal with the consequences by planning.”
Mr Asefi again rejected any precondition for negotiations that Iran insists are the only way to resolve the long-running nuclear standoff.
"We will decide based on the country's interests. We will not give up this technology under pressure and threats," he said.
Tehran, an OPEC member and one of the world's top oil producers, has repeatedly insisted its nuclear programme is for peaceful purposes only and that it has the right to enrich uranium as a signatory to the nuclear Non-Proliferation Treaty.
It has remained defiant since a UN resolution was adopted on July 31 after Tehran ignored a previous non-binding deadline and failed to respond to the incentives package, although it says it is still open to negotiations.
The package, backed by the five permanent UN Security Council members - Britain, China, France, Russia and the United States - plus Germany, offers Iran trade, technology and diplomatic incentives.
Weaponry displayed
Iran showed off new tactical missiles yesterday during nationwide war games.
State television reported that a short-range missile with a range of between 80 and 250 kilometres was test-fired in a demonstration of its "readiness to respond to any threat".
Massive military exercises began Saturday with the aim of testing new weapons and tactics against a potential enemy.
The White House said the military exercises was a reminder of the danger of the Islamic republic's nuclear ambitions.
"Iran sits at the nexus of weapons of mass destruction and terrorism; we know that Iran is producing and developing delivery systems that could threaten our friends and allies in the Middle East and Europe and eventually the United States itself," Emily Lawrimore, a White House spokeswoman, said in a statement.
Annan appeals for positive response
Meanwhile UN Secretary-General Kofi Annan has appealed for Iran to reply positively to a package of incentives offered by major powers in return for a freeze in uranium enrichment.
"I appeal to the government of Iran to seize this historic opportunity. Iran's reply will, I trust, be positive and that this will be the foundation for a final, negotiated settlement," Mr Annan said in a statement.
The UN leader said progress on the Iranian nuclear issue was essential for regional and global stability.