ABU DHABI - BRITAIN'S foreign policy chief said on Monday that Iran's nuclear programme presents an immediate threat to the Middle East and the rest of the world.

The comments by British Foreign Secretary David Miliband come a few days after a report by the International Atomic Energy Agency (IEAE) said its investigation into Iran's nuclear programme was 'deadlocked.'

'A nuclear Iran would present a decisive blow to those seeking peaceful solutions to the region's problems,' said Mr Miliband at a conference on nuclear energy in the Gulf held in the United Arab Emirates capital of Abu Dhabi.

Britain, the US and many other Western countries accuse Iran of using its nuclear programme as a cover for weapons development - a claim denied by Teheran.

Iran rejected Mr Miliband's comments, saying its enemy Israel was the greatest threat in the Middle East.

'If an opinion survey is done in Britain, a majority of people will reaffirm that the Zionist regime, Israel, is the main threat to the region,' Iran's official news agency quoted Foreign Ministry spokesman Hasan Qashqavi as saying.

Mr Miliband said the choice for Iran was clear: 'It can cooperate and halt its enrichment or continue on its current path toward the future of confrontation and isolation.' The British foreign secretary said Gulf countries have offered Iran 'serious incentives of cooperation' if it suspends uranium enrichment, an activity that can make nuclear fuel or fissile material for a bomb.

Gulf countries, most of which are majority Sunni Muslim, are wary of the rising influence of Shi'ite Iran in the Middle East and the country's nuclear intentions.

The IAEA said in a report last week that Teheran's stonewalling meant the agency could not provide credible assurances about the nature of Iran's nuclear programme. -- AP