Bush's warning came as Iran's supreme leader Ayatollah Ali Khamenei said defiantly that Tehran would press on with nuclear enrichment, paving the way for a likely showdown with the world body.

The UN Security Council has given Iran until the end of this month to halt enrichment -- a process that makes fuel for nuclear power plants but can be diverted to make weapons -- or face possible sanctions.

Asked at a White House news conference whether he was confident the council would move quickly on sanctions if Iran defied the decision of the international community, Bush said, "I certainly hope so.

"There must be consequences if people thumb their nose at the United Nations Security Council. We will work with people on the Security Council to achieve that objective," he said.

"And one of the things I will continue to remind our friends and allies is the danger of a nuclear armed Iran," Bush said, again blaming the Islamic republic for fuelling the recent bloody conflict in Lebanon.

The US leader's criticism also came on the eve of Iran's formal response to an offer by major powers proposing a package of incentives in return for a suspension of its uranium enrichment activities.

A nuclear official in Tehran said Iran would submit a "comprehensive written response" about the package to European nations on Tuesday.

The proposal -- backed by the five permanent UN Security Council members, Britain, China, France, Russia and the United States, plus Germany -- offers Tehran incentives in return for a freeze of sensitive nuclear work.

In another indication that Iran would not bow to international demands, the country's Atomic Energy Organisation said that suspension of uranium enrichment was "no longer possible."

Bush called for political will to resolve the Iranian nuclear question by the August 31 deadline, reminding that the ultimatum imposed on Iran was an international one, including Russia and China.

"Dates are fine but what really matters is will," he said. "And so therefore it's up to the international community, including the United States, to work in concert for effective diplomacy," he said.

The US leader said while the world should wait for the formal Iranian response to the UN deadline, he did not know whether the nuclear dispute would drag on.

"You know, I don't know," he said when asked if the dispute would prolong. "I certainly want to solve this problem diplomatically and I believe the best chance to do so is for there to be more than one voice speaking clearly to the Iranians, and I was pleased that we got a resolution," he said.

Bush was referring to the July 31 UN Security Council resolution passed by a 14-1 vote with Qatar in opposition ordering Iran to halt its nuclear activities by August 31 or face possible sanctions.

Resolution 1696 took the international community one step closer to a confrontation with Tehran that has been building for the past three years.

Iran insists its nuclear program is for civilian purposes but the United States and other Western countries believe the Islamic republic is keen on developing nuclear weapons.

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