Government spokesman Gholam Hossein Elham said Iran wanted to install "even more" than 3,000 centrifuges to enrich uranium at a key nuclear plant in defiance of Western warnings to freeze the sensitive activity.

His comments came amid a rumbling controversy over the arrest of five Iranian nationals by American forces in Iraq, accused by the United States of being Revolutionary Guards agents bent on stirring up trouble.

"We are heading towards a production of nuclear fuel that needs 3,000 and even more centrifuges," Elham told reporters. "Our aim is to ensure our industrial needs."

Elham confirmed that Iran would be making a major announcement on the "completion" of Iran's nuclear programme during the 10-day anniversary celebrations for the Islamic revolution in February. He did not go into details.

It remains unclear how far Iran has advanced with the plan to install 3,000 centrifuges and Elham only said the UN nuclear inspectors had been kept informed of "completed work".

The Islamic republic has so far declared the installation of two cascades of 164 centrifuges at the plant in Natanz and the installation of 3,000 centrifuges would mark a major step towards industrial enrichment.

It has so far shown no sign of caving into a Security Council resolution that imposed the first ever UN sanctions against Iran over its failure to suspend enrichment, which can be used to fuel power stations or to make nuclear bombs.

The United States accuses Iran of seeking a nuclear weapon, a charge fiercely rejected by Tehran which insists it only wants to provide energy for a growing population.

The previous day, foreign ministry spokesman Mohammad Ali Hosseini had dismissed speculation that Iran had slowed down its activities in Natanz, saying the enrichment work was continuing.

Its defiance comes amid mounting accusations from the United States that Iran is using its influence to meddle in the region, especially in Lebanon and Shiite-majority Iraq.

US President George W. Bush and Vice President Dick Cheney both issued new warnings to Iran Saturday, while US forces are still holding the five Iranians arrested in northern Iraq who Tehran says are merely consular staff.

"If we catch your people inside (Iraq) harming US citizens or Iraqi citizens you know we will deal with them," Bush warned Iranian President Mahmoud Ahmadinejad in a television interview.

Iran was "fishing in troubled waters" in Iraq, Cheney said. "We think it's very important that they keep their folks at home."

However Elham lashed out at the United States, which has had no diplomatic relations with Iran since the seizure of the US embassy by student radicals in 1979.

"The Americans are in a situation of escaping from the region and are ready to curse and insult in order to save face," he said.

He reaffirmed that Iran remains open to dialogue with the United States, but only on condition that Washington first changes its attitude towards Iran and the region.

"If the Americans are willing to get out of the region, and if they leave in calm, their previous yells and screams will be forgotten," said Elham.

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