Iran rejected a repeated demand by the U.N. Security Council to suspend uranium enrichment work after the 15-nation body imposed arms and financial sanctions on Tehran.

At the same time, major powers, who drafted the resolution passed on Saturday, immediately offered new talks and renewed their offer of an economic and technological incentive package.

But the sanctions would stay in place until Iran halts the enrichment of uranium and the reprocessing of spent nuclear fuel, which can be used to make a bomb or to generate electricity.

Iran's Foreign Minister Manouchehr Mottaki, who planned to hold a news conference on Sunday, told the Security Council after the unanimous vote that the council had been abused and manipulated by some of its members to take "unjustifiable action" against a peaceful nuclear program.

"I can assure you that pressure and intimidation will not change Iranian policy," he said. "Suspension is neither an option nor a solution."

"The world must know -- and it does -- that even the harshest political and economic sanctions or other threats are far too weak to coerce the Iranian nation to retreat from their legal and legitimate demands," Mottaki said.

Resolution 1747 goes beyond the nuclear sphere by banning Iranian exports of conventional arms and freezing financial assets abroad of 28 individuals and entities, including state-owned Bank Sepah and the commanders of the Revolutionary Guards. Some of those affected are said to be involved in supporting militant movements abroad.

NEW TALKS?

The new measures are a follow-up to a resolution adopted on December 23 banning trade in sensitive nuclear materials and ballistic missiles, as well as also freezing assets of individuals and institutions associated with atomic programs.

European Union foreign policy chief Javier Solana told reporters at an EU summit in Berlin he would contact Ali Larijani, Iran's main negotiator on nuclear issues, "to see whether we can find a route to negotiations."

A spokeswoman for Solana said he would try to reach Larijani by telephone later on Sunday or Monday.

Also in Berlin, British Prime Minister Tony Blair said the 15 British sailors and marines seized by Iran on Friday were captured in Iraqi waters and that Tehran must understand its action was "unjustified and wrong."

"They should not be under any doubt at all about how seriously we regard this act, which was unjustified and wrong," Blair told a news conference.

Britain is seeking access to the 15, whom Iran says were seized in Iranian waters.

The foreign ministers of countries that drafted the sanctions resolution -- the United States, Britain, France, Russia, China and Germany -- proposed further talks with Iran "to see if a mutually acceptable way can be found to open negotiations," according to a joint statement read by British Ambassador Emyr Jones Parry.

U.S. representative Alejandro Wolff warned that adoption of Resolution 1747 sent "a clear and unambiguous message to Iran" that the pursuit of a nuclear weapons capability "will only further isolate Iran and make it less, not more, secure,"

Western diplomats believe the new bans, and those imposed in December, are having an impact on curtailing new investments in Iran but leave the country's oil industry intact.

But Iran's Mottaki, noting the scope of the sanctions, said, "What can harming hundreds of thousands of depositors in Bank Sepah, with a 80-year history in Iran, mean other than confronting ordinary Iranians?"

UnderSecretary of State Nicholas Burns said in Washington the arms embargo was most significant in that it prohibits a transfer of Iranian weapons to Lebanon's Hezbollah guerrillas, the Palestinian Hamas movement, Syria or "to any state or terrorist organization."

Israeli Prime Minister Ehud Olmert welcomed the resolution, saying such measures could ultimately curb Iran's nuclear ambitions.

Israel, which is believed to have the Middle East's only atomic arsenal, has hinted it could resort to military strikes if diplomacy fails to rein in its arch-foe's nuclear program.

(Additional reporting by Michelle Nichols, and Mark John in Berlin)