"Iranians... will not back down one iota in defence of their rights," Ahmadinejad said in a speech in the southern city of Bushehr, the site of Iran's first nuclear power plant.

"The nuclear issue was the most important challenge since the revolution but with the help of God and your resistance, it is ending in favour of the Iranian nation," Ahmadinejad told cheering crowds.

Iran has been slapped with two sets of UN sanctions for its refusal to halt uranium enrichment and a third package is currently being considered by the Security Council.

The West fears that Iran is using its nuclear drive to try to build atomic weapons, a charge Tehran has consistently denied, saying it is aimed at generating electricity.

Uranium enrichment is a process which makes nuclear fuel but can also be diverted to produce the fissile core of atomic bombs.

The Security Council on Monday held informal discussions on a third sanctions resolution, agreed by five veto-wielding permanent members -- Britain, China, France, Russia and the United States -- plus Germany.

The proposed new measures include an outright travel ban by officials involved in Tehran's nuclear and missile programmes and inspections of shipments to and from Iran if there are suspicions of prohibited goods.

Diplomats said approval of the package, presented to the council's 10 non-permanent members on Friday, was likely to take several weeks.

Iran insists the International Atomic Energy Agency, whose board of governors meets in March, will confirm that its nuclear activities have not deviated towards weapons development.

Despite a four-year probe into Tehran's atomic drive, the UN nuclear watchdog has so far been unable to certify whether it is peaceful.

But in January 13, the IAEA announced that Iran had agreed to clear up remaining questions on its nuclear programme -- including any military activity -- in four weeks.

As a signatory to the nuclear Non-Proliferation Treaty Iran says it has a right to the nuclear fuel cycle, though its first nuclear power plant, which is built by Russians in the Gulf city of Bushehr is yet to go on line.

An Iranian official told reporters on Wednesday that Bushehr plant would be commissioned in October 2008.

Ahmad Fayazbakhsh, managing director of Iran's Production and Development of Nuclear Energy Company, said the date for the plant's electricity to join the national power grid will be announced after the commissioning.

Russia completed fuel deliveries for the plant on Monday and said it would "ideally" go on line this year.

Fayazbakhsh said that Russians had to still send about 1,900 tonnes of equipment including precision instruments and ventilation systems for the plant.

After delivering the first shipment of fuel in December, Russia said Iran no longer needed to pursue its own uranium enrichment, a message repeated by US President George W. Bush.

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