Addressing thousands of supporters at a rally in Iran's western Ilham province, Ahmadinejad said the U.S. National Intelligence Estimate report was an attempt to "extract America from its impasse, but it is also a declaration of the Iranian people's victory against the great powers."

In his speech, broadcast live on state television, Ahmadinejad added: "With the help of God, our people have resisted, are resisting, and will resist until the end. You are all victorious in all areas and especially in nuclear."

The NIE report, released Monday, contradicted the Bush administration's charges that Iran was developing atomic weapons and sharply contrasted with Bush's recent warnings of a "nuclear holocaust" and a third world war if Iran is allowed to pursue its nuclear program.

But the report, compiled by 16 U.S. spy agencies, has yet to nudge Bush's policy. The U.S. president said Tuesday that Iran continues to be a danger and that it would keep the military option on the table to stop the Islamic republic's nuclear program.

Ahmadinejad blasted Iran's foes for trying to deprive it from acquiring civilian nuclear energy when fossil fuels run out within the next 50 years. But he added that Tehran was ready to discuss its nuclear program with the West in the spirit of "friendship and cooperation."

"If you want to start up a new game, the Iranian people will resist and will not step back one inch," Ahmadinejad told his subjects. "If it is on the basis of friendship and cooperation, the Iranian people will be a great friend of yours."

Iranian officials appeared confident that the intelligence report would ease international pressure at the U.N. Security Council as Germany and the five permanent members – the United States, Britain, France, Russia, and China – draft a third set of sanctions on Tehran for its refusal to end uranium enrichment.

China and Russia, which support Iran's endeavor for nuclear energy, are expected to prevent tougher punishment sought out by the Western powers at the international organization in the aftermath of the NIE report, which also supported the findings of the U.N.'s International Atomic Energy Agency (IAEA) that has been investigating Iran's nuclear program for the past four years.

Russian Foreign Minister Sergei Lavrov said Wednesday that while Moscow was urging Iran to halt its uranium enrichment, the U.S. intelligence report should be considered before drafting a new resolution.

"We will judge the situation around the idea of a new U.N. Security Council resolution on the basis of all factors, including, of course, on the basis of public confirmation of the U.S. information," Lavrov said, in a report published by RIA Novosti news agency.

His remarks matched similar comments by Chinese diplomats. China's U.N. ambassador Wang Guangya said Tuesday the Security Council members would have to take the NIE report into consideration because "now things have changed."

Meanwhile, Arab analysts suggest the intelligence report was not only a setback for the Bush administration's policies in the region, but also a blow to Israel, Washington's closest ally in the Middle East.

Israel – believed to be the Middle East's only, albeit undeclared, nuclear power with atomic warheads – is largely seen as the main driving force behind U.S. policies in the region.

The U.S. intelligence report, which said Iran's nuclear weapons capabilities have been exaggerated for the past four years but could acquire the ability by 2015, has accelerated Israel's campaign to add pressure on Iran amid fears prompted by Ahmadinejad's repeated calls for wiping out Israel from the face of the map.

Israeli Defense Minister Ehud Barak Tuesday said his country believes Iran has probably restarted its atomic weapons program and Prime Minister Ehud Olmert stressed it was "necessary to continue our efforts with our American friends to prevent Iran from obtaining non-conventional weapons."

Israel said it will continue to strive against Iran's nuclear development, adding that its Foreign Minister Tzipi Livni will travel to Brussels Friday to "argue in favor of hardening international sanctions against Iran" during a meeting with top NATO diplomats.

But reports from Iran indicated Wednesday that Tehran will also accelerate its diplomatic efforts – armed with a U.S. assessment absolving it of developing nuclear weapons and a recent report by the IAEA on Iran's nuclear activities – to gather international support for depoliticizing its dossier.

The Iranians are expected to launch a diplomatic offensive to try to remove their nuclear issue from the Security Council and hand it to the IAEA in order to deal with the crisis technically rather than politically.