The door must be kept open for negotiation with Iran over its nuclear ambitions, Foreign Secretary Jack Straw said.
Talks beginning at the United Nations Security Council should mark "a new phase in diplomatic efforts" to resolve the nuclear crisis and not "the end of our efforts to find a negotiated solution", said Mr Straw.
Iran was reported last week to the Security Council by the International Atomic Energy Agency (IAEA), after it failed to satisfy the UN watchdog that its nuclear programme was exclusively for peaceful purposes.
The process could eventually lead to sanctions against Iran, but Mr Straw made clear that he wants action to be "incremental and reversible" to leave room for Tehran to take the steam out of the situation by ceasing nuclear enrichment activities.
In a message to the Iranian people, he assured them that Britain has no objection to their benefiting from civil nuclear power and wishes them "a freer, more democratic and prosperous future".
But he said that the regime of President Mahmoud Ahmadinejad was leading the country in "the wrong direction" and risked damaging the prospects of its people if it continued on the path of confrontation.
"If the Iranian regime chooses not to heed the concerns of the international community, it will damage the interests of the Iranian people," he warned, in a speech to the International Institute for Strategic Studies in London.
Tehran insists it is entitled to carry out experimental enrichment activities for civil nuclear energy generation. And Mr Ahmadinejad signalled that he was not ready to back down on the issue, telling a gathering of ambassadors: "We do know that sometimes one step back from a country's rights means destruction and loss of its existence."
Mr Straw set out Britain's priorities in the talks at the Security Council.
The UK's objective was "to exert the pressure needed so that Iran restores a full, verifiable suspension of all enrichment-related and reprocessing activity and co-operates in full with the IAEA", he said.
