UK Foreign Secretary Jack Straw has described as "unhelpful" the Iranian president's assertion that Iran has a right to produce nuclear energy.
Mahmoud Ahmadinejad told the UN his country had an "inalienable right" to produce nuclear energy - but said Islam precluded Iran having atomic weapons.
The US and the EU want Iran to give up any idea of enrichment capability.
Mr Straw said the speech was "disappointing" given recent talks with Iran over its nuclear stance.
"It is a difficult moment for the international community," he added.
The Foreign Office said nothing in Mr Ahmadinejad's speech suggested Iran wanted to abide by an agreement it had previously made.
But it said it was a difficult issue and "the only way to resolve it is diplomatically".
This could mean seeking a referral of the case by nuclear watchdog the International Atomic Energy Agency to the UN Security Council, where Iran could face sanctions.
Tehran recently resumed uranium processing, an activity that had been suspended since November 2004 while talks were held with three European countries - the UK, France and Germany - about its long-term nuclear plans.
Western powers fear Iran secretly wants to develop the ability to make a nuclear bomb.
Mr Ahmadinejad said Iran's programme was entirely legal and attacked what he called a "nuclear apartheid" that permits some countries to enrich fuel, but not others.
A senior US state department official speaking on the condition of anonymity, described Mr Ahmadinejad's speech as "very aggressive".
An EU spokeswoman told Reuters news agency Mr Ahmadinejad's language "leaves us no alternative but to pursue a UN referral".
"However, we want to build an international consensus on the matter. So we will be consulting with everybody," she said.
French Foreign Minister Philippe Douste-Blazy said the option of reporting Iran to the Security Council to face possible sanctions "remains on the agenda."
The board of governors of the IAEA is meeting on Monday in Vienna.
But BBC diplomatic correspondent Bridget Kendall said it was not certain whether the US and EU partners would convince other countries that Iran deserved to be reprimanded.
Iran has invited other nations to collaborate on its nuclear activities, which may for some sound like an attractive offer, she says. Iran's complaint that there is a double standard about who is allowed to become a nuclear power may be met with some sympathy.