"The world must understand that it must act so that uranium enrichment is stopped in Iran. This is crucial for world peace."

She said the international community could not accept an equivocal Iranian response to an incentives package for stopping sensitive nuclear work, calling it an attempt to stall until Tehran can develop a nuclear weapon.

And later in a speech before the German Council on Foreign Relations, she demanded UN sanctions against Iran.

"This is a test for the international community," she said. "It's time for real sanctions."

Germany is part of the "5 plus one" team along with the five permanent members of the UN Security Council -- the United States, France, Britain, Russia and China -- that drew up the package.

Few details have emerged of Iran's response but the United States has warned it would lead moves to impose sanctions if the reply fell short of UN Security Council demands.

Israel is widely believed to be the only country in the Middle East to have nuclear weapons, with at least 200 warheads, although it has never confirmed or denied it holds such an arsenal.

Livni, who also met Chancellor Angela Merkel and members of parliament, will fly Tuesday to Denmark, a non-permanent member of the UN Security Council.

Israel said Saturday it was not convinced by assurances from Iranian President Mahmoud Ahmadinejad that Tehran's nuclear program was no threat to the Jewish state.

"Israel is not fooled by such declarations, the sole aim of which are to avoid sanctions being imposed on Iran," government spokesman Avi Pazner told AFP.

Ahmadinejad "has often stated his true intentions concerning Israel", he said, a reference to repeated calls by the Iranian president for the country's destruction.

The Iranian president insisted Saturday that Tehran is "no threat to any nation, even the Zionist regime". He spoke in Khondab, in central Iran, after opening a heavy water production plant ahead of a UN deadline on August 31 to suspend sensitive nuclear fuel cycle work.

But the outspoken Ahmadinejad sought to provoke Israel again by writing in a letter to Merkel that the Holocaust may have been invented by the victorious Allied powers in World War II to embarrass Germany.

The remarks by the president, who has repeatedly disputed the Nazis' slaughter of six million Jews during World War II, came in a letter sent to Merkel in July whose contents were not disclosed until Monday.

Iran is also to hold an international conference in December that will allow historians to present "hidden aspects" of the Holocaust, newspapers reported Monday.

The plant at Arak will supply heavy water to be used as cooling fluid for a 40 MW research reactor due for completion by 2009.

The International Atomic Energy Agency has voiced concern over the risk of diversion of nuclear materials, as the research reactor could produce 8-10 kilograms (about 20 pounds) of plutonium a year -- enough to make at least two nuclear bombs.

Iran is under pressure from the international community to suspend its program of uranium enrichment, and the UN Security Council has given Tehran until August 31 to comply or face the threat of sanctions.

Western countries, led by the US, believe Iran wants to build nuclear weapons, but the Islamic republic insists it only wants to develop civilian nuclear power and has the right to master the required technology.

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