George Bush said other countries still saw Iran as "a problem"

A US intelligence assessment released on Monday said that Iran had halted a nuclear weapons programme in 2003.

Iranian President Mahmoud Ahmadinejad called the US report a "great victory" for Iran.

But Mr Bush said Iran still had "more to explain" about its past actions, and that it must cease uranium enrichment.

He said Iran had yet to acknowledge that it had a covert nuclear weapons programme which ran until 2003 - as stated by Monday's National Intelligence Estimate (NIE).

The report said Iran was keeping its options open, continuing to enrich uranium, which could be used for nuclear weapons in the future.

'Still a problem'

"The Iranians have a strategic choice to make," said the US president.

The report gives me a sigh of relief because it is consistent with our assessment

Mohamed ElBaradei

IAEA Director General

World reaction in quotes Media comment Should US change policy?

"They can come clean with the international community about the scope of their nuclear activities, and fully accept the longstanding offer to suspend their enrichment programme and come to the table and negotiate.

"Or they can continue on a path of isolation that is not in the best interest of the Iranian people."

Analysts say Monday's report may undermine Washington's strategy of attempting to rally other countries to impose stricter sanctions against Iran.

But Mr Bush said he believed Britain, France, Germany and Russia continued to see Iran's nuclear programme as "a problem, that must be addressed by the international community".

However, Russia and China - whose acquiescence would be required for any new UN sanctions - have said the NIE report raises questions about the need for new measures.

The head of the International Atomic Energy Agency, Mohamed ElBaradei, said Iran had been "somewhat vindicated".

Mr ElBaradei said the assessment was consistent with the IAEA's own, and that he hoped it would allow some space to pursue a diplomatic solution.

'Just path'

Mr Ahmadinejad said in a televised speech that the report had been a "fatal blow" to those who had filled the world for several years with threats, stress and anxiety.

"This report... is announcing a victory for the Iranian nation in the nuclear issue against all international powers," he said.

"You saw the report of the US intelligence. They said clearly that the Iranian people were on the just path," he added.

He warned Iran's critics: "If you want to start up a new game, the Iranian people will resist and will not step back one inch.

"If you want to negotiate with us as an enemy, the Iranian people will resist and will conquer you. If it is on the basis of friendship and co-operation, the Iranian people will be a great friend."

The BBC's Jon Leyne in Tehran says President Ahmadinejad is relishing the moment, particularly at a time when he has been facing growing criticism within the political elite over his handling of the nuclear issue.

The US has vowed to carry on pushing for a third UN sanctions resolution against Iran - a draft of which could be circulated by the end of the week.