The US has slapped tough sanctions on Iran's military and three state-owned banks today.
US Secretary of State Condoleezza Rice said the sanctions would help protect the international financial system from what she described as the 'illicit activities of the Iranian government'.
The sanctions target Iran's elite Quds Force as well as the country's Revolutionary Guards.
Some 22 Iranian government agencies, three state-owned banks and individuals are also being blacklisted as the US steps up a drive to squeeze Iran out of the international banking system.
The move is the latest by the US administration to step up pressure on Iran, which it accuses of fomenting global terrorism, supporting insurgents in Iraq and working to develop an atomic bomb. Iran vehemently denies the charges.
Ms Rice, who yesterday said that Iran posed the single greatest challenge to US security, reiterated the US was committed to resolving the crisis through diplomatic means.
But she warned that if Iran chose to continue down a path of confrontation, the US would act to resist what she said were the threats of the Iranian regime.
There was no immediate reaction from the Iranian foreign ministry.
The US administration has upped the rhetoric against Iran in recent weeks, and has led a push for a third wave of UN sanctions against Tehran to punish it for refusing to rein in its suspect nuclear program.
Iran argues that its nuclear program, including uranium enrichment, is merely for civilian purposes.
US president George W Bush suggested last week a nuclear-armed Iran could trigger 'World War III'.
In September the US Senate labelled the Revolutionary Guards a terrorist organization, a step that some Democrats said had set the United States on a path to war with Iran.
