Iranian President Mahmoud Ahmadinejad told a news conference on Tuesday that Iran's long-term target should be to install 60,000 centrifuges to enrich uranium, insisting the fuel is for civilian energy production only.
"That should be a cold jolt to the rest of the world," State Department spokesman Sean McCormack said in response.
"What that leads to is an Iranian nuclear weapon, which would be an incredibly destabilising event in the course of Middle East history," he said.
Iran has said it is looking to install 3,000 centrifuges by March 2007 and ultimately run 60,000 centrifuges -- compared to two cascades of 164 centrifuges apiece it has currently at its Natanz plant to enrich uranium on a research scale.
While Tehran insists its goal is civilian energy production, experts say that 50,000 centrifuges could produce 20 kilos (44 pounds) of weapons grade uranium in under a month.
A confidential report from the International Atomic Energy Agency (IEAE) meanwhile said Iran was pressing ahead with making highly enriched uranium while failing to co-operate with the UN nuclear watchdog's effort to ensure fissile material is not diverted to military projects.
The developments came as the United States was struggling to agree on the terms of a UN sanctions resolution with Britain, China, France, Germany and Russia -- the six powers who have been trying for months to entice Iran away from its nuclear ambitions.
Iran faces the sanctions for refusing to comply with an earlier UN Security Council resolution demanding it freeze its uranium enrichment work.
Britain, France and Germany presented a draft resolution last month that focussed on nuclear and ballistic missile-related sanctions and included travel bans and financial restrictions on Iranian scientists working on the nuclear and missile programs. But the talks have bogged down with Russia, which has strong economic ties to Iran and is helping build the country's first nuclear reactor, saying the measures are too tough and Washington believing they need to be tightened further.
The State Department's number two diplomat, Under-secretary of State Nicholas Burns spoke with his five counterparts on Tuesday in a bid to break the stalemate, McCormack said. But there were no signs of an imminent breakthrough.
US Secretary of State Condoleezza Rice is also expected to raise the issue with her Chinese and Russian counterparts on the sidelines of this week's meetings of the Asia-Pacific Economic Co-operation forum in Hanoi, he said.
McCormack said Ahmadinejad's boast and the IAEA report should "underscore the fact that we need a resolution in order to send a strong message to the Iranians that they need to change their behaviour".
He said the failure of the six powers to come up with a sanctions resolution "is starting to become also a question of the credibility of the Security Council of whether or not it can follow through in forcing its own resolutions".

Copyright AFP (Agence France-Presse), 2006