Iran's supreme leader Ayatollah Ali Khamenei lashed out at the United States on Tuesday, saying Tehran will reject any talks backed by its arch-foe because Washington is not to be trusted.

Khamenei's salvo raised the possibility that a Washington-backed nuclear fuel deal for a Tehran research reactor may be derailed, despite world powers turning up the heat on Iran to accept the UN-brokered offer.

Dismissing US President Barack Obama's series of diplomatic overtures towards Iran, the all-powerful Iranian leader said Washington wanted to negotiate with Tehran but its talks were full of "threats."

"Every time they have a smile on their face, they are hiding a dagger behind their back," said the country's top cleric who has the final say on all Iranian national issues.

"Iran will not be fooled by the superficial conciliatory tone of the United States," he said in a speech to students on the eve of the 30th anniversary of the seizure of US embassy in Tehran by Islamist students.

"This new American president repeatedly sent us oral and written messages to come and change the page... to come and cooperate in solving the problems of the world. We said we will not pre-judge. We will see their action and see what they do about the change," Khamenei said.

"But in the past eight months what we have seen is contradictory to what they say. They are telling us to negotiate, but alongside the negotiation there is a threat that if the negotiation does not bear the desired results, then we will do this and we will do that.

"We do not want any negotiation, the result of which is pre-determined by the United States," he said, adding that Tehran will always pursue its "scientific and technological rights and freedom."

His comments raised the possibility that the high-profile nuclear fuel deal backed by Washington could be derailed.

Iran is currently engaged in talks with world powers over how to procure nuclear fuel for a Tehran research reactor.

Under the UN-brokered deal Iran would send its low-enriched uranium (LEU) abroad for conversion into fuel for the reactor. Iranians say they would rather buy the fuel directly.

World powers led by Washington are backing the deal as they want to remove Tehran's stock of LEU which they fear could be further enriched by Iran to very high levels and used to make atomic weapons.

Tehran denies seeking to develop a weapons capability.

German Chancellor Angela Merkel hit out at Iran's hardline President Mahmoud Ahmadinejad on Tuesday, saying it would be unacceptable to allow a Holocaust denier to get the nuclear bomb.

"A nuclear bomb in the hands of an Iranian president who denies the Holocaust, threatens Israel and denies Israel the right to exist is not acceptable," she said in a rare address to the US Congress.

Khamenei said that giving the United States a veto over the nuclear talks would be like a "sheep and wolf relation which the late imam (Ayatollah Ruhollah Khomeini) has said that we 'do not want'."

Khomeini, who led the 1979 Islamic revolution which toppled the US-backed shah, opposed any dialogue with Washington that was not on an "equal footing."

"If anyone intends to violate the rights of the Iranian nation, the nation will firmly stand up to them and will make them kneel down," the state-owned Press TV's website also quoted Khamenei as saying.

On Monday, Foreign Minister Manouchehr Mottaki called for a review of the nuclear proposals under which Iran would ship out 75 percent of its LEU stocks.

Pressuring Iran to accept the deal, US Secretary of State Hillary Clinton said in Morocco on Monday: "This is a pivotal moment for Iran.

"Acceptance fully of this proposal would be a good indication that Iran does not wish to be isolated and does wish to cooperate."

Khamenei's comments came as Iran prepared to stage a rally marking the 30th anniversary of the November 4, 1979 seizure of the US embassy that sparked the rupture of relations with Washington.

Islamist students held 52 US diplomats hostage for 444 days.

Officials have expressed concern that critics of Ahmadinejad may try to turn this year's rally into a new protest against his controversial re-election in June.

In a veiled warning to the opposition, Khamenei said those with "ill-intentions" against the regime will not be allowed to "throw down the red carpet to the United States."