Iran's capability to launch satellites could "possibly lead to the development of ballistic missiles," US State Department spokesman Robert Wood told reporters. "That's of great concern to us."

France also saw a worrisome link.

"The technology is very similar to ballistic capabilities," said foreign ministry spokesman Eric Chevallier. "We can't but link this to the very serious concerns about the development of military nuclear capability."

Iran sent its Omid (Hope) satellite into space on Monday evening carried by the home-built Safir-2 space rocket, local news agencies reported.

A US official, speaking to AFP on condition of anonymity, confirmed that "it appears that the Iranians conducted a launch of a low-orbit satellite."

Iranian President Mahmoud Ahmedinajad Tuesday hailed the event, declaring his country has "officially achieved a presence in space."

But the timing also heightened concerns in the international community.

The launch announcement came on the eve of a meeting in Germany of senior diplomats from the six world powers -- the five permament members of the UN Security Council plus Germany -- which have been trying to end the nuclear standoff with Iran.

Despite UN sanctions Tehran continues to defy calls to freeze its uranium enrichment.

The West suspects Iran of wanting enriched uranium to build a nuclear weapon, a charge Tehran denies claiming its nuclear work is for peaceful energy purposes.

British Foreign Office Minister Bill Rammell said Iran's satellite launch just underscored and illustrated "our serious concerns about Iran's intentions."

He also commented on the similarity in the technology for satellites and ballistic missiles, saying Britain was still carrying out technical analyses of the Iranian launch.

"As a result, we think this sends the wrong signal to the international community which has already passed five successive UN Security Council resolutions on Iran's nuclear and ballistic missile programme," Rammell said in a statement.

A NATO officer Tuesday noted that if Iran's satellite launch is confirmed it would mean that Tehran has missiles capable of striking Israel and also southeast Europe.

As Iran's arch-foe in the Middle East, Israel sees Tehran's nuclear ambitions as a major threat.

On Tuesday the Israeli defence minister urged the new administration of US President Barak Obama, which has said it is open to possible talks with Tehran, not to exclude the option of military action against the Islamic Republic.

"We must reach a strategic understanding with the United States on the essence of Iran's nuclear programme and make sure that even if they choose a diplomatic track to halt it, the talks must be limited to a short time and then harsh sanctions and readiness to take action," Ehud Barak said in a speech.

"Limited time; harsh sanctions and all the options are on the table," he said.

Ahmadinejad however dismissed suggestions Iran's space programme has military goals, saying the satellite carried a message of "peace and brotherhood" to the world.

"We have a divine view of technology unlike the dominating powers of the world who have Satanic views," he said.

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