'Thunder' will fall on Israel if it attacks: Iran
Khamenei also said that the international community's suspicion that Iran was seeking nuclear weapons is based on a "lie" and he insisted that sanctions imposed on his country were ineffective and only strengthened its resolve.
His speech, broadcast on state television to mark the 1989 death of his predecessor and founder of the Islamic republic, Ayatollah Ruhollah Khomeini, contained no sign Iran was prepared to make any concessions on its disputed nuclear programme.
Instead, it was infused with defiance and Khamenei's customary contempt for Iran's arch-foes Israel and the United States.
If the Israelis "make any misstep or wrong action, it will fall on their heads like thunder," Khamenei said.
The Jewish state, he added, was feeling "vulnerable" and "terrified" after losing deposed Egyptian president Hosni Mubarak as an ally.
Allegations that Iran was trying to develop atomic bombs were false, Khamenei also said.
"International political circles and media talk about the danger of a nuclear Iran, that a nuclear Iran is dangerous. I say that they lie. They are deceiving," Khamenei said.
"What they are afraid of -- and should be afraid of -- is not a nuclear but an Islamic Iran."
He added: "They invoke the term 'nuclear weapons' based on a lie. They magnify and highlight the issue in their propoganda based on a lie. Their goal is to divert minds and public opinion from the (economic) events that are happening in the US and Europe."
Western economic sanctions imposed to pressure Iran to curb its nuclear programme were having no effect, Khamenei insisted. Their only impact, he said, was "deepening hatred and animosity of the West in the hearts of the Iranian people." Khamenei called the stance by the United States and its Western allies "crazy".