An angry Iran and its powerful ally Russia on Tuesday slammed new Western sanctions imposed on Tehran over its suspect nuclear programme, saying they were illegal and futile.

The measures against Iran's financial, petrochemical and energy sectors announced Monday by the United States, Britain and Canada amounted to no more than "propaganda and psychological warfare," Iranian foreign ministry spokesman Ramin Mehmanparast said.

They were "reprehensible" and would prove ineffective, he said.

Iran's parliamentary speaker, Ali Larijani, warned Britain and other Western nations "should wait for the Iranian reaction" to the sanctions.

Russia -- which with China had blocked any possibility of the Western steps going before the UN Security Council for approval -- said the sanctions were "unacceptable and against international law."

The declarations set the stage for a hardening of diplomacy over Iran and its nuclear drive. The issue has already generated speculation that Israel is mulling air strikes against Iranian nuclear sites.

The United States and its allies cited a November 8 report by the UN's International Atomic Energy Agency asserting "credible" evidence of Iranian nuclear weapons research as justification for the new sanctions.

President Barack Obama said in a statement Monday: "As long as Iran continues down this dangerous path, the United States will continue to find ways, both in concert with our partners and through our own actions, to isolate and increase the pressure upon the Iranian regime."

Iran has dismissed the IAEA report as "baseless" and biased. It insists its nuclear programme is for exclusively peaceful, civilian purposes.

The country is already subject to four sets of UN sanctions designed to force it to give up uranium enrichment, along with additional, unilateral US and EU sanctions.

The latest sanctions put more pressure especially on Iran's financial sector, with the US and Britain invoking anti-terrorist laws to target the central bank and other financial institutions.

Washington has declared Iran of "primary money-laundering concern" -- a label that could dissuade non-US banks and businesses dealing with it under threat of US reprisals.

London said it was "ceasing all contact" between its financial system and that of Iran, while Canada said it was halting "virtually all transactions" with the Islamic republic.

France said it, too, was "in favour of new unprecedented sanctions" and called for an embargo against Iran's most vital export: oil.

Diplomats said EU sanctions on some 200 Iranian firms and individuals were being considered and would likely be announced at an EU foreign ministers meeting on December 1.

Russia's foreign ministry said the Western move "seriously complicates moves for constructive dialogue with Tehran" on its nuclear activities.

"We believe that the constant strengthening of sanctions has long ago gone beyond the bounds of decisions on non-proliferation tasks surrounding the Iranian nuclear programme," it said.

Mehmanparast said the Western sanctions "show the hostility of these countries towards our people."

The spokesman predicted they would be hollow because trade with the United States and Britain was already at a minimum.

"With these resolutions... they think they can pressure our people to give up their rights (to nuclear energy). But they're wrong," he said.

Larijani reinforced that message, saying the sanctions "will not have any effect on what our country decides on the nuclear issue."

National Iranian Oil Company chief Ahmad Qalebani, who is also a deputy oil minister, was quoted by the ministry's news agency as saying "Iran is in no way worried about European countries not buying its oil."

He added: "In the event of a freeze on Iranian crude sales by France or other European states, Iran will sell its oil to other clients."

The new sanctions aim to make it more difficult for Iran to be paid for its oil exports.

They stop short, however, of hitting the central bank with more draconian measures, which Western officials and analysts feared could cause a spike in oil prices, worsening the global economic downturn and providing Iran with a revenue windfall.

Iran's economy, worth an estimated $480 billion according to the International Monetary Fund, depends on oil sales for around 70 percent of government revenues. The country is the second-biggest producer in OPEC, after Saudi Arabia.