Work restarted at Isfahan this week

He said he was working on a diplomatic solution, but was sceptical that one could be found.

The UN's atomic watchdog has called on Iran to halt nuclear fuel development.

Iran, which denies it is secretly trying to develop nuclear arms, restarted work at its uranium conversion plant at Isfahan on Monday.

"All options are on the table," said Mr Bush, when asked about the possible use of force during an interview for Israeli TV.

"The use of force is the last option for any president. You know we have used force in the recent past to secure our country," he said.

NUCLEAR FUEL CYCLE Mined uranium ore is purified and reconstituted into solid form known as yellowcake Yellowcake is converted into a gas by heating it to about 64C (147F) Gas is fed through centrifuges, where its isotopes separate and process is repeated until uranium is enriched Low-level enriched uranium is used for nuclear fuel Highly enriched uranium can be used in nuclear weapons

In depth: Nuclear fuel cycle Iran's press defiant

The BBC's Jonathan Beale in Washington says the president wants to send a clear warning to Tehran, although in reality the US already has its hands full in neighbouring Iraq.

'Cost them dearly'

The former Iranian President, Akbar Hashemi Rafsanjani, has expressed surprise at Thursday's call by the UN nuclear agency, the IAEA, for Iran to suspend its nuclear activities.

The IAEA asked its chief, Mohamed ElBaradei, to report on Iran's compliance by 3 September.

Speaking at Friday prayers in Tehran, Mr Rafsanjani said western opposition to Iran's decision to resume its nuclear programme would, as he put it, cost them dearly.

"Our people are not going to allow their nuclear rights to be seized," Mr Rafsanjani said. He said he was astonished that no country opposed the European Union-sponsored resolution, adopted by the IAEA, that urged Iran to stop any work on processing uranium for enrichment.

He emphasised that Iran's decision to resume its nuclear programme was irreversible, and said his country could not be treated like Iraq or Libya. The IAEA's 35-member governing body met in emergency session this week after Iran ended a nine-month suspension of work at Isfahan.

Iran insists it needs nuclear power as an alternative energy source, but Western nations fear it has plans to produce nuclear weapons.