"The Islamic republic has made up its mind and on the nuclear program and other issues it will continue on its path with strength, with God's help," Ayatollah Ali Khameni was quoted as saying on state television.
Ayatollah Khameni usually has the last word on key policy issues and made the remarks on the eve of a Tuesday deadline for Iran to formally respond to an offer by major powers proposing a package of incentives in return for a suspension of is nuclear program.
The comments led Washington to repeat a call on the United Nations to move swiftly to impose sanctions against Iran if it refuses to stop nuclear enrichment activities by an August 31 deadline set by the Security Council.
"There must be consequences if people thumb their nose at the United Nations Security Council. We will work with people on the Security Council to achieve that objective," US President George W. Bush said.
US dismissed
But Ayatollah Khameini dismissed the US position as a conspiracy against the Islamic world.
"Arrogant powers, led by the United States, are fearful of progress of
Islamic countries in various dimensions," he said.
"Therefore, in the nuclear issue, even though they know Iran is not seeking nuclear weapons, they are piling on the pressure to prevent our scientific progress as an Islamic country."
An Iranian nuclear official said Iran would submit a "comprehensive written response" to the offer from the international community on Tuesday.
The proposal, backed by the five UN Security Council permanent members -- Britain, China, France, Russia and the United States -- plus Germany, offers Tehran incentives in return for a freeze of sensitive nuclear work.
Iran has been flexing its muscles in nationwide war games in which it has test fired new missiles.
In a further indication it is unlikely to back down, the country's Atomic
Energy Organisation said that suspension of uranium enrichment was "no longer possible" ahead of the August 31 deadline.
"Given the technical progress of Iranian scientists, suspension of uranium is no longer possible under the current circumstances," deputy head Mohammad Saeedi, was quoted as saying by the semi-official Fars news agency.
But Tehran, which has faced a long investigation by the International
Atomic Energy Agency (IAEA) over its activities, insists it has the right to nuclear technology under the Non-Proliferation Treaty.
Mr Saeedi said Iran was also planning to start up a plant in the city of Arak to produce heavy water for a research reactor due for completion by 2009.
Nuclear risk
The IAEA is concerned about the risk of diversion of nuclear materials as the reactor could produce 8-10 kilograms (about 20 pounds) of plutonium a year, enough to make at least two nuclear bombs.
UN Secretary General Kofi Annan appealed Sunday for Iran to reply positively to the incentives package.
"I appeal to the government of Iran to seize this historic opportunity,"
Mr Annan said. "Iran's reply will, I trust, be positive and that this will be the foundation for a final, negotiated settlement."
The price of oil has surged on the back of the announcement. Iran is the number two producer in the OPEC oil cartel and has threatened to halt exports if sanctions are imposed.