Republican White House hopeful John McCain demanded action on tougher sanctions against Iran Wednesday, rejecting Democrat Barack Obama's call for aggressive diplomacy following Tehran's missile tests.

The presidential rivals sketched sharply different approaches after Iran's Revolutionary Guard test-fired a missile capable of reaching Israel, provoking global condemnation and jolting the US presidential race.

"We have lines of communication with the Iranians and they are many," McCain told reporters in Pennsylvania, saying Iran had already been offered a sheaf of incentives to change its ways.

"Their behavior has obviously not changed -- the time has now come for effective sanctions on Iran," McCain said.

Senator Obama argued for a carrot-and-stick policy of tightened sanctions and a more robust diplomatic effort by the United States to persuade Iran to halt its nuclear program.

"Through its nuclear program, missile capability, meddling in Iraq, support for terrorism, and threats against Israel, Iran now poses the greatest strategic challenge to the United States in the region in a generation," he said in a statement.

"Now is the time to work with our friends and allies, and to pursue direct and aggressive diplomacy with the Iranian regime backed by tougher unilateral and multilateral sanctions.

"It's time to offer the Iranians a clear choice between increased costs for continuing their troubling behavior, and concrete incentives that would come if they change course.

"The threat from Iran's nuclear program is real and it is grave. As president, I will do everything in my power to eliminate that threat, and that must begin with direct, aggressive, and sustained diplomacy."

McCain rebuked Obama for his failure to vote for a Senate measure last year that branded the Revolutionary Guard a terrorist organization.

"It's my understanding that this missile test was conducted by the Iranian Revolutionary Guard," McCain said.

"This is the same organization that I voted to condemn as a terrorist organization when an amendment was on the floor of the United States Senate. Senator Obama refused to vote, called it a provocative step," he said.

The Obama campaign said he thought the Guard should be designated a terrorist group, but balked at "aggressive" language in the resolution which he warned could be used to justify the use of US forces in Iraq to strike Iran.

The Illinois senator also drew fire from McCain for his offer to talk directly to the leaders of Iran and other US foes, but he countered that only sustained and forceful US engagement would work.

"Working with our European and regional allies is the best way to meet the threat posed by Iran, not unilateral concessions that undermine multilateral diplomacy," McCain said in a written statement.

"Iran's most recent missile tests demonstrate again the dangers it poses to its neighbors and to the wider region, especially Israel," McCain said.

But Obama countered that the Iranian crisis was being exacerbated by a lack of active US diplomatic action.

"Part of the problem that we've got right now is that we've been basically farming out the diplomatic activity to the Europeans. We've got to be actively engaged," Obama said on CNN.

McCain also said the tests shows the United States needs effective missile defense "now and in the future," including the planned missile defense sites in the Czech Republic and Poland.

The McCain campaign seemed to sense the dramatic missile tests could provide an opening to question Obama's perceived inexperience.

"Senator Obama's actions and his words don't match," said Republican Senator John Thune, a McCain supporter, on a conference call.

"This is where there is tremendous contrast with Senator McCain, who clearly understands the threat, who has demonstrated that over a long period of time, and who, I believe is ready to be commander-in-chief on day one."

The long-range Shahab-3 with a conventional warhead was among a broadside of nine missiles fired off from an undisclosed location in the Iranian desert.

The firing comes at a time of growing tension over Tehran's nuclear drive, which Iran insists is aimed solely at generating energy but the West fears could be aimed at making an atomic bomb.