President Bush told Iran on Monday that nations worldwide won't back down from their demand that Tehran suspend uranium enrichment.

"Iran's leaders have a clear choice. We hope they will accept our offer and voluntarily suspend these activities so we can work out an agreement that will bring Iran real benefits," Bush said a day before leaving for Vienna, Austria, where he will talk with European Union officials who are leading efforts to resolve the nuclear dispute.

President Bush speaks at the commencement ceremony of the US Merchant Marine Academy in Kings Point, N.Y, Monday, June 19, 2006. Bush is the first American president to address a graduating class of the US Merchant Marine Academy. [AP]

If Iran's leaders reject the offer, they will face action before the UN Security Council and progressively stronger political and economic sanctions, Bush said during a commencement speech at the US Merchant Marine Academy.

Bush discussed Iran with Russian President Vladimir Putin on Monday during an 18-minute phone call Putin placed to Bush. "The presidents agreed on the importance of remaining united in their efforts to press Iran to suspend all enrichment activities and begin negotiations on the incentives package," said Kate Starr, a spokeswoman for the National Security Council.

On Sunday, Iran accused the United States of trying to sway European nations from a possible compromise. The Iranian foreign ministry said US insistence that negotiations be conditioned on Tehran's suspension of uranium enrichment has narrowed the scope of possible solutions, and made it more difficult for all parties to reach an accord.

Bush made it clear he would not budge. He said allowing Iran to enrich uranium, a process that can make nuclear fuel for a power plant or fissile material for an atomic bomb, would present a grave threat to the world.

"The United States has offered to come to the table with our partners and meet with Iran's representatives as soon as the Iranian regime fully and verifiably suspends its uranium enrichment and reprocessing activities," Bush said. "I have a message for the Iranian regime: America and our partners are united. We have presented a reasonable offer. Iran's leaders should see our proposal for what it is - a historic opportunity to set their country on a better course."

On June 6, European Union foreign policy chief Javier Solana presented a package of rewards and possible penalties to Iran. The package was drawn up by the five permanent members of the UN. Security Council - the United States, Britain, China, France and Russia - and Germany.

The package calls on Iran to suspend, not permanently halt, uranium enrichment as a condition for the start of talks, although the negotiations are aimed at getting Iran to agree to a long-term moratorium on such activity.

Iran says enriching uranium is its country's right. Iranian officials say they are reviewing the package and will propose amendments.

Bush is the first American president to address a graduating class at the academy. He spoke there at the request of former White House chief of staff, Andrew Card, who briefly studied there in the 1960s and hitched a ride on Air Force One to share the stage with the president.

"When he was a plebe, he was stuffed in a duffel bag and run up the flagpole," Bush said about his former chief of staff who left the school when he married.

The US Merchant Marine Academy was created following a 1934 fire in which 134 people died aboard the passenger ship Morro Castle. Congress acknowledged the need for maritime-training standards and passed the Merchant Marine Act that created the academy in 1936. President Franklin D. Roosevelt dedicated the school in 1943 in Kings Point.

Kings Point graduates work as deck officers aboard container ships, oil tankers, passenger cruise ships and other vessels. Others remain on land and have become engineers in shipbuilding companies and work in a variety of port operations, including security, while some opt for military careers. Since the Sept. 11, 2001 terrorist attacks, the academy has played a leading role in developing international training standards for maritime security.

"From this campus, every man and woman could see the black smoke rising from the Twin Towers," Bush said. "Within hours, your midshipmen were working side-by-side with the Coast Guard and Marine division of the New York City Fire Department," Bush told the midshipmen seated on a sunny football field at the academy outside New York City.

"Over the next nine days, you moved firefighters and police and emergency response teams into ground zero. You moved tons of food and water supplies. The heroic response to that terrible day showed the spirit of America, and the spirit of this fine academy."