Iran aims to send a satellite into space next summer and will not retreat in a nuclear row with the West, its President said yesterday, in a defiant speech on the anniversary of the country's 1979 Islamic revolution.

President Mahmoud Ahmadinejad addressed a major rally in Tehran a week after Iran sparked international concern by test-launching a rocket designed to carry its first domestically made research satellite into orbit.

"God willing, next summer the first 100 per cent Iranian-made satellite will be positioned in orbit," he said.

The West fears Tehran is covertly trying to obtain nuclear bombs. Iran, the world's fourth-largest oil exporter, says it needs nuclear energy to meet booming electricity demand.

The technology used to put satellites into space could also be used for launching weapons, analysts say, and both the US and Russia have expressed concern about the rocket test.

Russia, which has long argued there is no evidence Tehran is seeking atomic weapons, and which is supplying fuel for its Bushehr nuclear power station, said the test raised suspicions about the real nature of Iran's atomic programme.

But President Ahmadinejad made clear Iran would press ahead with its satellite work, signalling it would carry out two more such tests to prepare for the real launch.

State media last week said the research satellite, called Omid (Hope), would be launched by March 2009.

President Ahmadinejad also said Iran would not back down in the nuclear dispute with the West, despite the threat of a third round of UN sanctions on the Islamic Republic over its refusal to halt sensitive atomic work.

"They should know that the Iranian nation will not retreat one iota from its nuclear rights," he told the crowd which had gathered in the capital for the 29th anniversary of the revolution that toppled the US-backed Shah.

Iranian officials had called on people to turn out in large numbers to show their unity in the face of Western pressure. State television broadcast footage of rallies held across Iran.

"America should understand and believe that the Iranian nation will not back down from its rights," demonstrator Leila Jafari said.

Others at the rally burnt effigies representing Uncle Sam.

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