President Bush warned Iran today that it faced UN sanctions if it refused to stop nuclear enrichment as demanded by the United Nations Security Council.

Tehran has set itself a deadline of tomorrow to give its response to a Security Council resolution demand that it stop all enrichment of uranium — which can provide the material for atomic weapons — in return for a raft of incentives.

On the eve of that deadline, Iraq's supreme leader, Ayatollah Ali Khamenei said that Iran would stick to its course on the nuclear issue and the Iranian military test-fired a short-range missile in maneouvres near the Pakistani border.

It it also emerged that Iran had turned away UN inspectors wanting to examine its main underground nuclear site.

Diplomats and officials said Iran’s unprecedented refusal to allow access to the facility at Natanz could seriously hamper international attempts to monitor Iran's nuclear programme and is a violation of the Non-Proliferation Treaty.

Asked at a White House press conference whether he was confident that the UN Security Council, which has set Iran an August 31 deadline to comply with its resolution, would move quickly on sanctions of Iran remained defiant, Mr Bush said: "I certainly hope so."

He added: "In order for the United Nations to be effective, there must be consequences if people thumb their nose at the Security Council. We will work with people on the Security Council to achieve that objective.

"I certainly want to solve this problem diplomatically and I think the best chance to do so is for there to be more than once voice speaking to the Iranians."

Iran has set August 22 as the deadline for its formal response to the UN's offer of economic and political rewards if it freezes enrichment and negotiates on its nuclear programme. Iran says that it has the right to enrich uranium because it wants to build a civil nuclear power industry to meet its electricity needs.

Although Iranian officials have already promised a "multi-faceted" response rather than a straightforward "Yes" or "No", Ayatollah Khamenei's statement, quoted by state television, suggested that Iran was preparing a trenchant stance.

"The Islamic Republic of Iran has made its own decision and in the nuclear case, God willing, with patience and power, will continue its path," he said. "Arrogant powers and the US are putting their utmost pressure on Iran while knowing Iran is not pursuing nuclear weapons."

The issue has returned to the fore since a ceasefire was agreed in the conflict between Israel and the Lebanese militia group Hezbollah, which receives considerable financial aid and weapons from Iran.

Mr Bush said that "the final history in the region has yet to be written" but what was interesting about the violence in Iraq, Lebanon and the Gaza strip was that all three involved terrorist groups trying to thwart the spread of democracy. "Iran is obviously part of the problem," he added. "Imagine if they had a nuclear weapon."

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