TEHRAN - Iran on Monday test-fired missiles it says could reach targets inside Israel, as the defiant Revolutionary Guards staged war games amid tension with the West over Tehran's atomic drive.

The UN nuclear watchdog revealed on Friday that Tehran was building a second uranium enrichment plant, ratcheting up tensions with the West which suspects Iran wants to acquire atomic weapons, a charge it denies.

Guards' air force commander Hossein Salami said his men test-fired surface-to-surface Sejil and Shahab-3 missiles on the second day of the manoeuvres.

"An improved version of Shahab-3 and the two-stage Sejil, powered by solid fuel, were fired," Salami was quoted as saying by state-owned Arabic language Al-Alam television.

The Fars news agency said it was the first time the Sejil had been test-fired during a military exercise.

The Revolutionary Guards said the tests were now completed.

"The last stage of the 'Great Prophet' ballistic missile manoeuvres were carried out successfully this morning. Thus the manoeuvres have ended, with all the targets hit," it said on its Sepahnews website.

State-owned English-language Press TV earlier broadcast the first footage of the Sejil, as the light blue missile barrelled skywards trailing thick white smoke.

The channel also showed footage of a Shahab-3 blasting off in a ball of fire from a desert terrain.

Iran says both weapons can travel for 2,000 kilometres (1,240 miles), which would put arch-foe Israel, most Arab states and parts of Europe, including much of Turkey, within range.

On Sunday, the Guards fired several missiles, some bearing multiple warheads, state media reported.

The Shahab-1 and Shahab-2, with a range of between 300-700 kilometres, "precisely hit the targets," the air force commander Salami said.

The Guards also test-fired three other solid-fuel missiles -- the Tondar-69, Fateh-110 and Zelzal -- which have a range of between 100 and 400 kilometres.

On Monday, Salami issued a stern warning to Iran's foes.

"Our response will be strong and destructive to those who threaten the existence, independence, freedom and values of our regime. They will regret it," the official IRNA news agency quoted him as saying.

The manoeuvres raised concern in Washington, London and Paris, while a Russian foreign ministry source said the world should not "succumb to emotions" in dealing with Iran.

The United States said the tests were "provocative" and urged Iran to agree to "unfettered access" to its newly revealed enrichment plant.

The war games were consistent with the "provocative nature with which Iran has acted on the world stage," said House spokesman Robert Gibbs.

Asked what Iran could do when it meets with six world powers on Thursday in Geneva for talks on its suspect nuclear programme, Gibbs said: "They can... agree to immediate, unfettered access."

British Foreign Secretary Miliband also expressed concern.

"It is obviously reprehensible as such but it mustn't distract us from the big question of this week, which is how will Iran respond at the meeting with the international community on Thursday?" he told Sky News television.

The French foreign ministry urged Iran to stop such "deeply destabilising activities" and respond "without delay to the demands of the international community to reach a negotiated settlement on the nuclear question."

German foreign ministry spokesman Jens Ploetner said testing missiles ahead of the Geneva talks "is not a signal that will build trust."

Iran has in the past threatened to target US bases in the region and to block the strategic Gulf Strait of Hormuz waterway for oil tankers if its nuclear sites are attacked.

Israel, widely believed to be the Middle East's sole if undeclared nuclear-armed power, and the United States have never ruled out a military option to thwart Iran's nuclear drive.

On Friday, the International Atomic Energy Agency (IAEA) said Iran was building a second uranium enrichment plant, and US Secretary of State Hillary Clinton dismissed claims by Iranian officials that it has peaceful aims.

"We don't believe that they can present convincing evidence that it's only for peaceful purposes, but we are going to put them to the test on October 1," she said.

But foreign ministry spokesman Hassan Ghashghavi insisted the new plant "does not violate any international law" and gave its location as "in the Fordoo region," near the city of Qom in central Iran.