Only two of the council's 15 members voted in favour of the US resolution, highlighting the division between Washington and its European allies since President Donald Trump withdrew from the Iran nuclear accord in May 2018.

"The decision of the UN Security Council not to renew the arms embargo on Iran is scandalous," Netanyahu said.

"Iranian terrorism and aggression threaten the peace of the region and the entire world. Instead of opposing weapons sales, the Security Council is encouraging them," he added.

The US and Israel accuse Iran of being set on developing a nuclear bomb, a charge always denied by Tehran.

Israel is believed to be the Middle East's sole nuclear-armed power, though it has never acknowledged it.

"We will continue to act in close cooperation with the US and countries in the region to block the Iranian aggression," said Netanyahu.

"The State of Israel will continue to act with full force against whoever seeks to undermine its security," he added.

Benny Gantz, Israel's defence minister and alternate premier, also denounced Friday's vote.

"In its constant pursuit of the nuclear and its efforts to spread terrorism and violence, Iran is undermining the peace of the region and the entire world," he said.

The embargo on conventional arms is due to expire on October 18 under the terms of a resolution that blessed the Iran nuclear deal, signed in July 2015 and officially known as the Joint Comprehensive Plan of Action (JCPOA).

Under the deal, negotiated by then US president Barack Obama, Iran committed to curtailing its nuclear activities for sanctions relief and other benefits.

Iran hailed the council's decision, saying the US has "never been so isolated".