Iran can deter any threats against it, the head of the Revolutionary Guards said in comments published on Wednesday, after the country's air force announced plans for a military exercise to help deter its foes.

Iran is embroiled in a deepening international standoff over its nuclear programme, which the United States and Israel suspect is aimed at making bombs, a charge Tehran denies.

In a shift in policy the United States will send a senior envoy, Under Secretary of State William Burns, to talks between Iran and major powers this weekend to discuss Tehran's response to an offer of incentives if it suspends enriching uranium.

Washington had said previously it would not be involved in pre-negotiations with Tehran unless it gave up enrichment.

"The enemies of Iran would not dare to undertake any direct threat or any other action against Iran," Iran's Revolutionary Guards commander-in-chief Mohammad Ali Jafari was quoted as saying by the official IRNA news agency.

U.S. leaders have not ruled out military options if diplomacy fails to assuage fears about Iran's nuclear activities, which the world's fourth-largest oil producer says is only to produce electricity.

Israel, long assumed to have its own atomic arsenal, has vowed to prevent Iran from emerging as a nuclear-armed power. It staged an air force exercise in June that stoked speculation about a possible assault on Iranian nuclear sites.

But Iran has refused to halt sensitive nuclear work, as demanded by the powers before formal negotiations can begin on a package of trade and other benefits they have offered to Tehran.

Tension increased further last week after Iran test-fired missiles in the Gulf, including one it says could reach the Jewish state and U.S. bases in the Middle East.

Fears of conflict helped to push oil prices to new record highs last week, although prices fell $6 on Tuesday to around $138 a barrel amid growing concerns about the U.S. economy.

GENEVA TALKS

Iran has vowed to strike back at Tel Aviv, as well as U.S. interests and shipping, if it is attacked. The Pentagon said on Tuesday that Iran has the ability to launch a ballistic missile capable of hitting sections of eastern and southern Europe.

Jafari said the United States and Israel had realised their "weakness" in relation to Iran: "With the measures we have devised the threats against our country are being nipped in the bud," he said in the northwestern city of Orumiyeh.

Iran's state Press TV late on Tuesday said the country's air force would in the near future hold large-scale drills.

Iran is estimated to have 280 combat aircraft, including Russian-made MiG 29 fighter jets, but serviceability may be 80 percent or lower.

"We have upgraded our air force fleet, radar systems, and missile systems over the past few years and we are now ready to counter any threat," Air force commander Ahmad Mighani said.

But analysts say Iran's real ability to respond to any attack could be with more unconventional tactics than a missile salvo, such as deploying small craft to hit oil tankers, or using allies in the area to strike at U.S. or Israeli interests.

In Washington on Tuesday, a U.S. official said Burns will join European Union foreign policy chief Javier Solana and envoys from China, Russia, France, Britain and Germany in the meeting with Iranian nuclear negotiator Saeed Jalili in Switzerland on Saturday.

He said Burns would not act as a negotiator and would not meet separately with Jalili, but would put forward the White House position that Iran must give up enrichment for any real talks to start.

"This will be a one-time participation designed to show unity (among major powers) and the message will be very clear," the official said.

Tehran and Washington cut diplomatic ties shortly after the Iranian revolution of 1979. But the United States has held several rounds of talks over the past year with Iran over what it sees as Tehran's meddling in Iraq.

Saturday's meeting follows Solana's trip to Tehran in June when he presented the powers' incentives package to coax Iran to halt uranium enrichment, which can have both civilian and military uses.