Iran insisted Sunday that a nuclear freeze was not on the agenda and showed off its latest weaponry, two days before it is to respond to an international offer aimed at ending the long-running crisis.
Tehran risks sanctions if it fails to abide by a UN Security Council resolution calling for a halt to uranium enrichment, a process which creates fuel for nuclear power plants but can also be used to make the core of a bomb.
"The issue of suspension means returning to the past. It is not on the agenda of the Islamic republic of Iran," foreign ministry spokesman Hamid Reza Asefi told reporters.
Tehran is due to respond on August 22 to a package of incentives offered by major powers in return for a freeze in enrichment, amid Western fears its nuclear programme is a cover for efforts to build atomic weapons.
The Security Council has also given Iran until August 31 to halt enrichment and reprocessing activities or face possible sanctions.
"The resolution is of no legal and lawful validity. Therefore, it is unacceptable for the Islamic republic," Asefi said.
"It (sanctions) would be more harmful to them (the West) than for us. We have been under informal sanctions since the 1979 Islamic revolution and we can deal with the consequences by planning," Asefi said.
In the meantime, Iran is preparing for any possible military action over its nuclear activities and showed off new tactical missiles on Sunday during nation-wide war games.
Iran test-fired a short-range missile in a demonstration of its "readiness to respond to any threat," state television reported. The upgraged surface-to-surface missile, called Saegheh or lightning in Farsi, has a range of between 80 and 250 kilometers (50 and 155 miles).
Massive military exercises began Saturday with the aim of testing new weapons and tactics against a potential enemy. Twelve army divisions along with air and naval forces and missile units are involved in the military operation, named "Zolfaghar Blow" after the two-point sword of Ali, the cousin and son-in-law of the Prophet Mohammed.
"The enemy has gone insane because of the capabilities of Lebanon's Hezbollah," army chief Major General Ataollah Salehi was quoted as saying by official news agency IRNA Saturday, referring to the Shiite group which was locked in a 34-day conflict with Israel under a cease-fire last week.
"And given the insane enemy's history, we should always be prepared," he said.
In April, the Islamic republic unveiled a wide range of weaponry such as multiple-head missiles, high-speed torpedoes and radar-evading anti-ship missiles during a week of exercises in the strategic Gulf waters to the south.
Iran has remained defiant since a UN resolution was adopted on July 31 after Tehran ignored a previous non-binding deadline and failed to respond to the incentives package, although it says it is still oen to negotiations.
The package, backed by the five permanent UN Security Council members - Britain, China, France, Russia and the United States - plus Germany, offers Iran trade, technology and diplomatic incentives if the country agrees to suspend uranium enrichment.
Asefi again rejected any precondition for negotiations that Iran insists are the only way to resolve the long-running nuclear stand-off.
"We still believe the issue must be settled through negotiations ... They have conditioned talks to execution of the resolution by us. This is baseless. It tightens the atmosphere for both sides to reach a solution," Asefi said.