The U.N. Security Council ratcheted up sanctions on Iran on Monday for refusing to suspend nuclear enrichment and other sensitive activities, but Tehran dismissed the decision as illegal.

There were 14 votes in favour, none against and one country, Indonesia, abstained. Previous sanctions resolutions were adopted unanimously in December 2006 and March 2007, but council envoys said Monday's message to Iran was a strong one.

Iran denounced the current and previous resolutions as violations of international law and said they only harmed the 15-nation Security Council's standing.

"The credibility of the Security Council ... is readily downgraded to a mere tool of the national foreign policy of just a few countries," Iran's U.N. ambassador, Mohammad Khazaee, told the council before the vote.

He also dismissed as "baseless" new U.S. intelligence suggesting Iran had conducted an intensive study into building atomic weapons, saying his country's nuclear program "has been, is and will remain absolutely peaceful."

Speaking at the opening of a meeting of the U.N. nuclear watchdog's governing board in Vienna, Mohamed ElBaradei, the agency's head, urged Tehran to clear up the matter swiftly.

"I urge Iran to be as active and cooperative as possible in working with the agency to clarify this matter of serious concern," ElBaradei told the 35-nation policy-making board of the International Atomic Energy Agency (IAEA).

The sanctions resolution calls for more travel and financial curbs on Iranian individuals and companies and makes some restrictions mandatory. It also expands a previous partial ban on trade in items with both civilian and military uses to cover sales of all such technology to Iran.

The new resolution adds the names of 13 individuals and 12 companies to the list of people and firms suspected of aiding Iran's nuclear and missile programs. One of the individuals is Brig. Gen. Mohammad Reza Naqdi, who it says had tried to skirt U.N. sanctions.

In addition, it calls for increased vigilance over Iranian financial institutions and says countries should be especially wary of two large Iranian banks - Bank Melli and Bank Saderat. Dealings with Iran's Bank Sepah were banned last year.

TIGHTENING THE SCREWS

Tehran has so far ignored all council and IAEA resolutions demanding it freeze its uranium enrichment program, which can produce fuel for nuclear power plants or atomic weapons.

Diplomats describe the sanctions as a moderate tightening of the screws from the two previous resolutions. They said this was the most Washington could get after a surprising U.S. intelligence report released in December said Iran had scrapped an atom bomb program in 2003.

The five permanent council members - the United States, Britain, France, China and Russia - and Germany, which is not on the council, agreed in Berlin on January 22 on a draft text outlining a third round of sanctions against Tehran.

Washington had hoped for a swift vote on the sanctions text, but negotiations dragged on for six weeks.

It was clear since January that the new sanctions would pass, since they had the backing of all permanent council members - including Russia and China, which have close business ties with Iran - and six non-permanent members.

But the resolution's European co-sponsors - Britain, France and Germany - wanted to send the strongest possible message to Iran by getting as close to unanimity as possible.

Libya, Vietnam and South Africa, as well as Indonesia, had expressed reservations about the resolution, but vigorous Western lobbying managed to win over all except Jakarta.

"Iran is cooperating with the IAEA," Indonesian Ambassador Marty Natalegawa said, explaining his decision to abstain. "At this juncture more sanctions are not the best course."

In a statement on behalf of the five permanent members and Germany, British Ambassador John Sawers told the council the group wanted EU foreign policy chief Javier Solana to meet Iran's chief nuclear negotiator Saeed Jalili to try to reopen negotiations and resolve the nuclear impasse.

Without elaborating, Sawers said the six powers were willing to beef up the incentives offer Solana delivered to Tehran in 2006 if Iran suspended enrichment.

"We reconfirm the proposals we presented to Iran in June 2006 and are prepared to further develop them," he said. "Our proposals will offer substantial opportunities for political, security and economic benefits to Iran and to the region."