Tehran: Iran said yesterday that the United States was not in a position to take military action against it after a veiled threat from US Vice-President Dick Cheney and urged Washington and its allies to engage in dialogue.

"We do not see America in a position to impose another crisis on its tax payers inside America by starting another war in the region," Iranian Foreign Minister Manouchehr Mottaki told reporters yesterday.

"The current situation has cost them a lot."

Mottaki was responding to Cheney who renewed Washington's warning to Iran earlier yesterday that "all options" were on the table if Tehran continues to defy UN demands to halt uranium enrichment.

"But the Islamic Republic of Iran has prepared for two scenarios. We prefer the second which is based on dialogue and constructive interaction," Mottaki added at a news conference with visiting Bahrain Foreign Minister Shaikh Khalid Bin Ahmad Al Khalifa.

The UN's atomic energy agency has confirmed that Tehran is still carrying out sensitive uranium enrichment work in defiance of the UN Security Council.

UN meeting

Diplomats from the UN Security Council's five permanent members plus Germany will meet in London tomorrow to discuss further measures against Tehran.

Mottaki called on the parties meeting in London to "take a brave decision and resume their negotiations with Iran because it is to the benefit of all people".

"As we have said before our activity is transparent and peaceful. A brave and logical decision can become a solution for this matter and could also start international cooperation."