US President Barack Obama said he preferred diplomacy in dealing with Iran over its nuclear program, but would consider imposing 'sanctions that bite' if the diplomatic track did not work.

Mr Obama, speaking at a news conference at the end of the G20 summit, would not go into details about what potential sanctions might be considered.

Earlier, the US, Britain and France have condemned Iran's nuclear ambitions, after Tehran revealed the existence of a second uranium enrichment plant.

Speaking at the G20 summit in Pittsburgh, US President Barack Obama said the second site defied a global ban, and he warned that Tehran was endangering the security of the world.

Barack Obama called Iran's activities 'a direct challenge' to the nuclear non-proliferation regime and said it was time for Tehran to act immediately to restore the confidence of the international community.

He said Iran had the right to a peaceful nuclear programme, but the new plant 'exceeded those needs'.

'Iran is breaking rules that all nations must follow,' he insisted.

British Prime Minister Gordon Brown joined the criticism, saying 'this is the most serious matter facing the world today'.

He said that the international community 'must draw a line in the sand' over the issue.

French President Nicolas Sarkozy warned that if there was not an in depth change by Iran, 'sanctions will have to be taken.'

Iran told the International Atomic Energy Agency that it had a second uranium enrichment plant in a letter to IAEA Director-General Mohamed ElBaradei.

Iran was previously known to have one enrichment plant at Natanz, under daily surveillance by IAEA inspectors.

It is already under UN sanctions for refusing to suspend enrichment and failing to clarify suspicions that its nuclear activity is aimed at developing atom bombs.

Iran has always stressed that its plant is for generating electricity only.

The IAEA has requested specific information and an immediate inspection of the plant to ensure it was for peaceful purposes.