Tony Blair expressed deep dismay at Iran’s decision to resume nuclear fuel research and said that it would cause alarm across the world. Nothing was ruled out, he said. But Iran’s hardline President Mahmoud Ahmadinejad brushed aside growing condemnation and said that it would pursue its course regardless.

In Berlin today, Jack Straw, the Foreign Secretary, and his counterparts from France and Germany are expected to call for the governing board of the International Atomic Energy Agency (IAEA) to be convened within two weeks to refer Iran to the Security Council. The council is likely to request a new report from Mohamed ElBaradei, the IAEA Director-General, before taking further action. That will be produced within 30 days, after which the 15-nation council will demand action from Iran and consider sanctions.

Mr Blair’s hopes of united action will rest on efforts over the next two weeks to persuade China and Russia and other countries such as India and Brazil that the issue should be referred to the Security Council.

Ministers were playing down remarks yesterday from Gernot Erler, Germany’s Deputy Foreign Minister, who said a referral could lead to a dangerous escalation of the situation. Diplomats suggested that the “official” view to be put in Berlin by Frank-Walter Steinmeier, the German Foreign Minister, would be more positive.

President Ahmadinejad said yesterday that Tehran was not intimidated by the international “fuss” over its resumption of nuclear research. “The Iranian nation and Government, with firmness and wisdom, will continue its path in seeking and utilising peaceful nuclear energy.”

He reiterated Iran’s rejection of US allegations that it was seeking nuclear weapons. “Our nation does not need nuclear weapons, nor is interested in having them, and even considers them illegal,” he said.

In the Commons, Mr Blair described the developments as “very serious indeed. I don’t think there is any point in us hiding our deep dismay at what Iran has decided to do,” he told MPs. “When taken in conjunction with their other comments about the State of Israel they cause real and serious alarm.”

Asked by David Cameron, the Tory leader, about sanctions, he said: “Obviously we don’t rule out any measures.”

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