The US named Iran as an area of "primary money laundering concern," a step designed to dissuade non-US banks from dealing with it; blacklisted 11 entities suspected of aiding its nuclear programmes; and expanded sanctions to target companies that aid its oil and petrochemical industries.
Washington stopped short, however, of targeting Iran's central bank, a step that could have cut it off from the global financial system, sent oil prices skyrocketing and jeopardised US and European economic recovery.
In a coordinated action, Britain ordered all UK financial institutions to stop doing business with their Iranian counterparts, including the Iranian central bank. A source familiar with the sanctions said the steps would not directly target trade in Iranian oil.
Canada said it would ban the export of all goods used in Iran's petrochemical, oil and gas industry and "block virtually all transactions with Iran," including with its central bank, with an exception for Iranian-Canadians to send money home.
While not taking concrete actions, France urged the EU and other nations to immediately freeze the assets of Iran's central bank and to suspend purchases of Iranian oil, steps it called "sanctions on an unprecedented scale."
Separately, diplomats said EU governments could reach a preliminary deal on Tuesday to add about 190 Iranians and entities to a list of those targeted by asset freezes and travel bans.
The new EU measures will likely aim at industries such as shipping and will be formalised at a meeting ofEU foreign ministers on 1 December, but discussions on possible further steps could take place in the coming days, diplomats said.The series of announcements were in response to an International Atomic Energy Agency report published on 8 November that presented intelligence suggesting Iran had worked on designing an atomic bomb and may still be secretly carrying out related research.
That report, calls by US lawmakers to sanction Iran's central bank, and media speculation about a possible Israeli military strike against Iran's nuclear sites have pushed US President Barack Obama to seek tougher sanctions against Tehran.
Not the straw that breaks the camel's back
Analysts said they did not believe the steps would dissuade Iran from pursuing its nuclear programme, which Washington and its allies suspect is a cover for seeking nuclear arms. Iran says its nuclear work is entirely peaceful.
"Is this the straw that will break the camel's back? No," said George Perkovich, director of the Nuclear Policy Programme at the Carnegie Endowment for International Peace, a Washington think tank.
The range of unilateral steps planned by Western powers reflects the difficulty of persuading Russia and China not to veto further measures at the UN Security Council, where they have supported four previous sanctions resolutions.
Russia's Foreign Ministry denounced the new US sanctions as "unacceptable and contradictory to international law," Interfax news agency reported.
US sanctions have already made it extremely difficult for many global oil companies and traders to obtain bank financing to trade Iranian crude, of which less than one-third goes to Europe with the rest flowing to China and India.
In Tehran, Trade Minister Mehdi Ghazanfari said sanctions were hitting the Iranian economy but warned Western countries they were harming their own interests.
"Sanctions are a lose-lose game in which both sides make a loss. If they don't invest in our oil projects, they will lose an appealing market," Ghazanfari told a news conference before the British and US announcements.
Iranian President Mahmoud Ahmadinejad has often said sanctions have little effect and in some cases make the economy stronger by making Iran find domestic solutions to challenges.