Foreign Minister Silvan Shalom and Deputy Prime Minister Shimon Peres said the election could not be classified as free and fair and its result would lead to major problems for the wider world.

"The result proved once again that Iran is adding more radicalism and extremism rather than serious reforms and reconciliation," Shalom told reporters.

"In reference to the nuclear threat, the international community must formulate a unified and stern policy towards Iran. We must ensure that Western countries do not become a hostage to Iranian radicalism."

Peres said the result would compound Iran's diplomatic isolation at the hands of the West.

"The conclusion is that the dangerous combination of extremists, non-conventional weapons, and isolation from the West will continue and will generate a great deal of problems for the free world," he said in a statement.

Since the downfall of Saddam Hussein's regime in Baghdad, Israel has come to view Tehran as its number-one enemy and has been trying to whip up international action to thwart Iran's alleged nuclear weapons ambitions.

Iran's foreign ministry said Sunday it would continue to engage in nuclear negotiations with the European Union but is in a stronger position following Ahmadinejad's election.

"With this election, the Islamic republic of Iran is more capable of confronting challenges, and the Europeans have to take this into consideration," spokesman Hamid Reza Asefi told reporters.

Tehran mayor Ahmadinejad's stunning triumph over former president Akbar Hashemi Rafsanjani, a pragmatic conservative who was widely expected to win, means that all the main state institutions are in the hands of hardliners.

David Kimche, former director general of Israel's foreign ministry, said that Iranian support for the radical Palestinian movement Hamas and the anti-Israeli Lebanese militia Hezbollah would increase after the result.

"There will be more Iranian interference, more of an attempt to prevent peace" with the Palestinians, Kimche told AFP. "There will be more money, more military training for Hamas and Hezbollah."

The Israeli press warned that Tehran was likely to work against the moderate Palestinian leader Mahmud Abbas, also known as Abu Mazen.

The top-selling Yediot Aharonot daily said the new government would take more extremist positions on the Israeli-Palestinian conflict.

"This means redoubled efforts to undermine Abu Mazen's status and to derail any attempt to bring Israel and the Palestinian Authority closer to an understanding, increased Iranian support for Hamas, Islamic Jihad and any other groups working to prevent a possible Israeli-Palestinian settlement, increased Iranian efforts to penetrate extremist Israeli Arab groups, and continued efforts to spy on Israel and to sabotage it."

The Palestinian response to the election result was muted, voicing respect for its outcome.

"The Palestinian Authority respects the democratic choice of Iranians. This election was an internal affair and we respect its outcome," chief negotiator Saeb Erakat told AFP.

Relations between the Palestinian Authority and Iran have been frosty in recent years, with Tehran seen as closer to the likes of Hamas than the mainstream Fatah movement.

The late Palestinian leader Yasser Arafat fell out with Tehran over its rejection of the 1993 Oslo autonomy accords.

Abbas said in February that he had accepted an invitation from President Mohammad Khatami to visit Iran. But while Abbas has visited most other countries in the region, there is still no date for an Iran trip.

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