UK Foreign Secretary Jack Straw has appealed to the Iranian people - saying he wants to help them have a freer and more prosperous future.
In a speech in London Mr Straw said the Iranian people "deserved better" than their current government.
International agencies should publish more reports in Farsi on the internet to help reach the Iranians, he said.
The UN Security Council is to discuss Iran's nuclear programme but Mr Straw says military action is inconceivable.
He refused to comment directly when asked by the BBC's Frank Gardner about contingency plans being drawn up by US military chiefs about possible strikes on Iranian targets.
In his speech at the International Institute for Strategic Studies, he said: "Sadly, Iran is now going in the wrong direction and the chances that were there before Iran are being squandered.
"Since President Ahmadinejad's election last year, he and the small group which surrounds him have adopted policies both at home and abroad which risk real damage to Iran's reputation and its relations with the rest of the world.
"Iran and the Iranian people deserve better."
'Not too late'
Earlier Mr Straw told BBC Radio 4's Today programme Iran was "very, very sensitive" to the prospect of referral to the UN Security Council.
Tehran had repeatedly miscalculated by thinking it could split the UN, he said.
The result of Iran "putting itself beyond the pale" of the international community was serious economic damage.
"It is a proud country with a good civilisation. We want to see a normalisation of relationships with this country and it is still not to late for the Iranians to get back into negotiations with us," he said.
Mr Straw said Iranian President Mahmoud Ahmadinejad was "a difficult individual to deal with", but added that he was not "the critical decision-maker" in Iran.
He renewed his claim that military action against Iran was inconceivable.
Destabilisation fears
"This is not Iraq for a moment ... This is an issue that has to be resolved, yes by pressure, but by peaceful and democratic means," he said.
"Although no American president is ever going to theoretically rule out any option, in practice military action is not on the Americans' agenda."
He said Iran was a voluntary signatory to the nuclear non-proliferation treaty.
"Iran solemnly said it was not going to do anything that would lead to the development of a nuclear weapons system ..." he said.
"If Iran is developing a nuclear weapons capability it would very seriously destabilise the Middle East and shift the balance of power there to a very worrying extent."
On Wednesday, UN nuclear watchdog the International Atomic Energy Agency referred Iran to the UN Security Council after months of growing tension over the country's nuclear programme. The security council has the power to impose sanctions.
Absent minister
Iran has vowed to resist international pressure, insisting it has the right to civilian nuclear technology. It denies US and EU accusations that it is seeking to develop nuclear weapons.
On Sunday, Iran said Moscow's compromise proposal on its nuclear programme was "off the agenda" after the security council referral.
But ministry spokesman Hamid Reza Asefi said his country was still open to negotiations with Russia, as long as Iran's right to conduct nuclear fuel research on its own soil was recognised.
Russia had sought to persuade Iran to move its enrichment programme to Russian territory, which would allow closer international monitoring.
During his BBC interview Mr Straw also defended fellow Cabinet minister, Culture Secretary Tessa Jowell, after it emerged she had chosen not to attend Cabinet talks on Iran since 2003 due to her husband's business dealings.
The foreign secretary said occasionally ministers had to absent themselves from discussions because of a potential conflict of interest which may arise from their spouse's activities.
"That is provided for by the ministerial code. Tessa, to my absolutely certain knowledge, acted promptly and properly," he said.
The prime minister's official spokesman added that the culture secretary had "absented herself voluntarily".
