Iran's president says his country will not budge "one iota" from its nuclear programme, despite new allegations it may be trying to develop nuclear weapons.
Mahmoud Ahmadinejad said a new report by the UN's nuclear watchdog was based on "empty claims" provided by the US.
France and the US say they will consider fresh sanctions against Iran.
The US and its allies suspect Tehran is developing nuclear weapons, which it is feared could threaten Israel.
But Iran has long insisted that its nuclear programme is solely for civilian purposes.
"We will not budge an iota from the path we are committed to," Mr Ahmadinejad said in a televised speech.
"Why do you damage the [UN] agency's dignity because of America's invalid claims?"
Addressing the US he added: "We will not build two bombs in the face of your 20,000. We will develop something that you cannot respond to, which is ethics, humanity, solidarity and justice.
"You should know that no enemy of the Iranian people has ever tasted victory."
The International Atomic Energy Agency (IAEA) said it had information indicating Iran had carried out activities "relevant to the development of a nuclear explosive device".
The IAEA says the research includes computer models that could only be used to develop a nuclear bomb trigger.
It documents alleged Iranian work on the kind of implosion device that would be needed to detonate a nuclear weapon.
BBC diplomatic and defence correspondent Jonathan Marcus says the IAEA report - published on the Institute for Science and International Security website - is a serious indictment of Iran's nuclear activities that gives Tehran a troubling case to answer.
However, the report stops short of saying explicitly that Iran is developing a nuclear bomb.
French Foreign Minister Alain Juppe said the seriousness of the report warranted a meeting of the UN Security Council.
"If Iran refuses to conform to the demands of the international community and refuses any serious co-operation, we stand ready to adopt, with other willing countries, sanctions on an unprecedented scale," he told RFI radio.
Mr Juppe said tough sanctions were needed to "prevent Iran from continuing to obtain resources that allow it to pursue its activities in violation of all international rules".
'Spectrum of action'
A senior US official said Washington would consult with partners on "additional" pressure and sanctions on Tehran.
"We don't take anything off the table when we look at sanctions. We believe there is a broad spectrum of action we could take," the official said, quoted by AFP news agency.
The EU said the report "seriously aggravates" existing concerns.
"Overall these findings strongly indicate the existence of a fully-fledged nuclear weapons development programme in Iran," said a spokeswoman for EU foreign policy chief Catherine Ashton.
Baroness Ashton represents six world powers - the UK, China, France, Germany, Russia and the US - in stalled negotiations with Iran over its uranium enrichment programme.
However, the BBC's Kim Ghattas in Washington says China and Russia are unlikely to support further sanctions against Iran.
Russia said the IAEA report had caused rising tension and more time was needed to determine whether it contained new, reliable evidence of a military element to Iran's nuclear programme.
Experts say Iran is at least one year away, perhaps several, from being able to produce a nuclear weapon.