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In a flare-up of the war of words between Israel, Iran and the United States, Foreign Minister Tzipi Livni Tuesday branded Iran as a "neighborhood bully," and Iran's supreme leader was quoted as saying that U.S. President George Bush and his advisers were acting erratically and sound mentally ill.

Iranian President Mahmoud Ahmadinejad, meanwhile, visiting Rome for a UN conference on the world food crisis, declared that Israel will soon disappear, and that the "satanic power" of the United States faced destruction.

In a pointed reference to Iran during her appearance before the Knesset Foreign Affairs and Defense Committee, Livni said "We want to make clear that this region is one in which you either beat the neighborhood bully, or you join him."

Therefore, she continued, "Dialogue with Iran on the part of world figures will have influence on the entire moderate camp in the area. All hesitation creates an image of weakness."

For this reason, Livni added, "Iran needs to understand the threat of a military move exists and is not being taken off the table. The more that this is made clear, the less the need to put this to use, later on.

"Thus, keeping the military threat on the table is important."

Turning to talks with the Palestinian Authority, the foreign minister said that agreements on security issues were critical. "Security needs to be detailed in every agreement. An agreement can't be reached without agreeing on security issues," said Livni.

"Israel can't permit herself to just throw the keys to the other side and hope for the best."

Iran: Bush acting 'mad'Iran's supreme leader, Ayatollah Ali Khamenei, said Monday that Iran would not bow to Western pressure and stop its nuclear program. He reserved unusual criticism for Bush and his advisers.

"Sometimes they threaten, sometimes they order assassinations ... and sometimes they ask for help - it's like mad people staggering to and fro," he said.

"Iran is not after nuclear weapons. It is after peacefully using nuclear energy ... we will follow this path and ... will reach it," Khamenei said in a speech broadcast live on state television.

"The Iranian nation has announced a number of times that we are not after nuclear weapons. Everybody knows this and logic also confirms this," Khamenei said.

The chief of the UN nuclear watchdog agency , Mohamed ElBaradei, said on Monday Iran seemed to be holding back information needed to clarify intelligence reports that it researched nuclear bombs in secret and he demanded "full disclosure" by Tehran.

Iran has rejected the intelligence as baseless, forged or irrelevant.

"Today no logical person or officials go after nuclear weapons. The Iranian nation oppose these kind of weapons," Khamenei said in the speech to mark the 19th anniversary of the death of late revolutionary leader Ayatollah Ruhollah Khomeini.

"Nuclear weapons do not bring a nation any power because it cannot be used," he told the crowd that had gathered at the shrine where Khomeini is buried near the capital Tehran.

Ahmadinejad: EU burdened by 'false' Zionist regime Europe is bearing the economic and political costs of a "false regime" of Zionists, Iranian President Mahmoud Ahmadinejad said on Tuesday in his second verbal attack on Israel in as many days.

On Monday, Ahmadinejad said that Israel would soon disappear from the map and the "satanic power" of the United States faced destruction. "I do not believe that my declarations create problems," Ahmadinejad said through a translator on arriving for his first trip to western Europe as president.

"People like my comments, because people will save themselves from the imposition of the Zionists. European peoples have suffered the greatest damage from Zionists and today the costs of this false regime, be they political or economic costs, are on Europe's shoulders," he said.

Ahmadinejad did not elaborate. He is in Rome to attend a United Nations summit on global food security.

On Monday Ahmadinejad said: "You should know that the criminal and terrorist Zionist regime which has 60 years of plundering, aggression and crimes in its file has reached the end of its work and will soon disappear off the geographical scene."