European governments will agree today to freeze the assets of Iran's biggest bank as part of a tightening of sanctions over Tehran's nuclear programme, Gordon Brown announced this morning.

Speaking at a joint London press conference with President Bush, the Prime Minister also confirmed that Des Browne, the Defence Secretary, is to an increase in the UK troop contingent in Afghanistan to record levels.

Referring to ministerial talks in Luxembourg, Mr Brown said: “Today Britain will urge Europe, and Europe will agree to take further sanctions against Iran.

“We will take action today that will freeze the overseas assets of the biggest bank in Iran, the Melli bank, and secondly action will start today for a new phase of sanctions on oil and gas.”

Mr Brown noted that the EU's foreign policy chief, Javier Solana, had had a latest round of talks with Iran over the weekend. “We await the Iranian response and will do everything possible to maintain the dialogue,” he said.

“We will take any necessary action so that Iran is aware of the choice it has to make to start to play its part as a full and respected member of the international community or face further isolation."

Mr Bush followed up Mr Brown's statement with a declaration that he had not ruled out the use of force if Iran did not comply with international demands over its nuclear activities, although he hoped to end the crisis via diplomacy.

“Now’s the time to work together to get it done,” Mr Bush said. “All options are on the table, however."

Mr Brown's declaration follows a report in an Iranian weekly today that Iran has withdrawn around $75 billion from Europe to prevent the assets from being blocked under new sanctions.

On Saturday, Iran again ruled out suspending uranium enrichment despite the offer by six world powers of help in developing a civilian nuclear programme if it stopped activities the United States and others suspect are designed to make bombs.

The offer - agreed last month by the United States, Britain, Russia, China, Germany and France - is a revised version of one rejected by Tehran two years ago.

Iran’s refusal to suspend nuclear enrichment, which can provide fuel for power plants or material for weapons if refined much more, has drawn three rounds of UN sanctions since 2006. Tehran says it aims only to generate electricity.

On Afghanistan, Mr Brown announced that Britain will send extra troops to Helmand province, although the precise number is to be announced by the Defence Secretary this afternoon.

"Eighteen months ago, the Taleban boasted that they and their paid foreign fighters would drive our forces out of southern Helmand (province). Now most agree that security is on the way to being transformed," he said.

"Today, Britain will announce additional troops for Afghanistan, bringing our numbers in Afghanistan to the highest level."

The announcement comes as the body of the 100th British soldier to die in Afghanistan - seen by both Washington and London as a key frontline against global terrorism - since operations began in 2001 was being repatriated.

Mr Bush also urged Afghanistan and Pakistan to expand dialogue on how to confront militants who operate along their shared border. "There needs to be better co-operation," he said.

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