Iran has test-fired nine missiles, including a new version of the Shahab-3, which is capable of reaching its main regional enemy Israel.
The Shahab-3, with a range of 2,000km (1,240 miles), was armed with a conventional warhead, state media said. Iran has tested the missile before, but the latest launch comes amid rising tensions with the US and Israel over the country's nuclear programme.
The early morning launch at a remote desert site sent oil prices climbing.
White House spokesman Gordon Johndroe called on Iran to "refrain from further missile tests if they truly seek to gain the trust of the world".
Two other types of missile with shorter ranges were also fired as part of the Great Prophet III war games being staged by Iran's military.
Brig Gen Hoseyn Salami, commander of Iran's Revolutionary Guards' air force, said: "Our missiles are ready for shooting at any place and any time, quickly and with accuracy.
"The enemy must not repeat its mistakes. The enemy targets are under surveillance."
The tests are intended to deter any Israeli or US strike against Tehran's nuclear installations, says BBC diplomatic correspondent Jonathan Marcus.
Our correspondent - who is in Israel - says the country has a fully operational anti-ballistic missile system, which Israeli military experts believe can counter any Iranian threat.
But there is no room for complacency, he adds.
HAVE YOUR SAY Why is it ok for Israel, the US and the UK to have WMDs or nuclear weapons but not for any other country? Mike, London, UK
On Monday, an adviser to Iran's Supreme Leader said it would retaliate to any military attack by hitting the Israeli city of Tel Aviv.
Other commanders have threatened to close the Strait of Hormuz, through which a large part of the world's oil flows, and to target the US and its allies around the world if Iran comes under attack.
US Secretary of State Condoleezza Rice said the test justified Washington's plan to base a missile shield plan in Eastern Europe - which is strongly opposed by Russia.
Her point was backed by the Republican US presidential candidate, John McCain. His Democratic rival, Barack Obama, told ABC's Good Morning America Iran was "a great threat".
The French, German and Italian governments also expressed concern at the missile tests.
But Iranian President Mahmoud Ahmadinejad has insisted his country had no intention to attack Israel.
Speaking on a visit to Malaysia on Tuesday, Mr Ahmadinejad said Iran did not fear an attack by the US or Israel over its nuclear activities, dismissing the possibility as a "joke".
Western leaders have been attempting to convince Tehran to stop enriching uranium, which it has continued despite the imposition of sanctions by the UN and the European Union.
Iran insists its nuclear research is for a civilian energy programme.
Published: 2008/07/09 13:54:51 GMT
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