Iran has said it will no longer allow snap inspections of its nuclear sites, after the UN nuclear watchdog voted to report Tehran to the Security Council.
President Mahmoud Ahmadinejad ordered the country's nuclear agency to end inspections from Sunday.
Iran also plans to press ahead with full-scale uranium enrichment.
US President George W Bush said the referral to the UN "sent a clear message to the regime in Iran" that it could not gain nuclear weapons.
Possible sanctions
He said the International Atomic Energy Agency's (IAEA) vote to report Iran to the council was not the end of negotiating, but the start of "an intensified diplomatic effort".
"The path chosen by Iran's new leaders - threats, concealment, and breaking international agreements and IAEA seals - will not succeed," he said.
But he echoed the sentiments of his recent State of the Union address to Congress, saying the IAEA vote would not affect Iran's right to civilian nuclear power.
"Iran's true interests lie in working with the international community to enjoy the benefits of peaceful nuclear energy," he said.
US Secretary of State Condoleezza Rice said the US hoped Iran would heed the "clear message" from the IAEA.
"The world will not stand by if Iran continues on the path to a nuclear weapons capability," Ms Rice said in a statement.
The move to report Tehran, agreed by 27 of the 35 states on the IAEA, could lead to possible sanctions against Iran.
"Because of the resolution of the IAEA... the organisation should stop voluntary implementation of the additional protocol and other co-operation from Sunday," Mr Ahmadinejad said.
The deputy head of Iran's Supreme National Security Council, Javad Vaiedi, said Russia's compromise offer to enrich uranium on its own soil was now in doubt.
Russia and Iran had agreed to hold further talks on the issue on 16 February, but it is unclear whether that meeting will go ahead.
Russia's Deputy Prime Minister Sergei Ivanov has said he is still hopeful Tehran will consider the proposal, which has been seen by the West as a possible way forward.
Uranium enrichment is a process that creates fuel for nuclear reactors and, potentially, for a nuclear bomb.
'Iran should listen'
Iran denies it has been concealing efforts to develop nuclear weapons, maintaining its programme is only for producing energy and does not have a military aim.
The resolution urged Iran to extend "indispensable and overdue" co-operation to the IAEA and help it "clarify possible activities which could have a military dimension".
NEXT STEPS
But it puts off any action until a report is delivered by agency chief Mohamed El Baradei at the next IAEA meeting on 6 March.
Mr El Baradei said "it is a critical phase but not a crisis".
Russia and China agreed to support the resolution on condition it did not contain any immediate threat of sanctions against Iran.
Only Venezuela, Cuba and Syria voted against it.
India voted in favour of the motion in spite of the government coming under intense domestic pressure to stand by Iran.
The vote came weeks after Iran said it was resuming suspended research on uranium enrichment.
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