Khatami does not normally criticise other foreign leaders

Iran's reformist President, Mohammad Khatami, said Mr Bush's speech was "bellicose and insulting" and accused his counterpart of "war-mongering".

President Bush said in his address on Tuesday that Iran pursued weapons of mass destruction and exported terror.

But a White House spokesman said President Bush was not intending to signal imminent military action against Iran, Iraq and North Korea, when he described them as forming part of an "axis of evil" posing a threat to world peace.

And a State Department spokesman, Richard Boucher, said the US was still ready to hold talks with both Iran and North Korea.

War on terror "not over"
	1. Iraq: Suspected of wanting to pursue programmes to develop nuclear, chemical, and biological weapons and missile developments 2. Iran: Listed by US as state sponsor of terrorism. Washington says Tehran plans to develop weapons of mass destruction 3. North Korea: The US's main concern has been missiles and other weapons programmes and willingness to export sensitive technology See also: Detailed clickable map

Cancelled visit

"Unfortunately, the United States has been abusive in every direction since the September 11 attacks," the Iranian head of state said. "This US policy towards Iran is doomed to fail."

Earlier, the Iranian Foreign Minister Kamal Kharrazi said: "With these arrogant remarks, the American Government unmasks its true face and proves its desire to spread its hegemony through the entire world."

Mr Kharrazi has now called off a visit to New York.

The BBC's correspondent in Tehran, Jim Muir, says Mr Bush's remarks about the unrepresentative nature of the Iranian leadership have been particularly damaging.

Politicians in Iran have pointed out that Mr Khatami won a much larger share of the electorate when he was returned to office last year than did Mr Bush himself.

Losing favour

The US initially viewed Iran as a supporter of its war against terror but in the past month, Mr Bush has accused Iran of interfering in post-Taleban Afghanistan and relations have been further tainted by an alleged Iranian attempt to smuggle weapons to the Palestinians.

Kharrazi denounced Bush's "arrogant remarks"

President Khatami, many of whose reformist supporters had been hoping for an improvement in relations with Washington, said Mr Bush's remarks were reminiscent of Washington's attitude towards Iran after the 1979 Islamic revolution which toppled the US-backed shah.

"The American president's remarks not only showed that he does not have the ability to learn from history but also that the US policy is now worse and more unrealistic than under his predecessors," he said.

Iraq has also condemned Mr Bush's speech, accusing America of practising "state terrorism" against those who did not surrender to US demands.

Despite, the White House's assurance that the president's remarks did not represent an immediate plan of attack, Senate Majority Leader Tom Daschle, a Democrat, said he believed Congress would support military action against Iraq, Iran or North Korea.

"We have to do whatever is necessary to prevent the kind of attacks that we saw last fall. If it takes pre-emptive strikes, pre-emptive action, I think Congress is prepared to support it," he told ABC television.