"Today, they have created a myth in the name of Holocaust and consider it to be above God, religion and the prophets," Ahmadinejad told thousands of people in the southeastern city of Zahedan.

His remarks drew swift condemnation from Israel, Germany and the European Commission. Germany said the remarks would affect upcoming negotiations over Iran's nuclear program.

Ahmadinejad last week questioned whether the Nazi destruction of 6 million European Jews during World War II occurred and said Israel should be moved to Europe. He also provoked an international outcry in October when he called for Israel to be "wiped off the map."

But Wednesday was the first time he publicly denied the Holocaust. Touring southeast Iran, Ahmadinejad said that if Europeans insist the Holocaust happened, then they are responsible and should pay the price.

"If you committed this big crime, then why should the oppressed Palestinian nation pay the price?" Ahmadinejad asked rhetorically.

"This is our proposal: if you committed the crime, then give a part of your own land in Europe, the United States, Canada or Alaska to them so that the Jews can establish their country," he said, developing a theme he raised in Saudi Arabia last week.

German Foreign Minister Frank-Walter Steinmeier called the remarks "shocking and unacceptable." He said the German government had summoned the Iranian charge d'affaires to make "unmistakably clear" its displeasure.

"I cannot hide the fact that this weighs on bilateral relations and on the chances for the negotiation process, the so-called nuclear dossier," Steinmeier said, referring to European talks with Iran on its nuclear program.

Israeli Foreign Ministry spokesman Mark Regev said: "The repeated outrageous remarks of the Iranian president show clearly the mind-set of the ruling clique in Tehran and indicate clearly the extremist policy goals of the regime.

"The combination of fanatical ideology, a warped sense of reality and nuclear weapons is a combination that no one in the international community can accept," Regev added, referring to allegations that Iran is developing nuclear bombs.

In Brussels, Belgium, European Commission spokeswoman Emma Udwin said the president's comments were "completely unacceptable."

"We feel very strongly that Iran is damaging its own interests with these kind of remarks," she said.

Ahmadinejad said the West had harmed Muslims, invaded their countries and plundered their wealth.

"If your civilization consists of aggression, making oppressed people homeless, suffocating the voices of justice and bringing poverty to a majority of the world's people, we say loudly that we hate your hollow civilization," he said.

Ahmadinejad has been unapologetic about taking Iran on a more openly defiant course, insisting on Iran's right to develop its nuclear program which it insists is peaceful and often using rhetoric reminiscent of the 1980s heyday of the Islamic Revolution.

The president's views sharply conflict with those of predecessor Mohammad Khatami, a moderate who used to call for dialogue among civilizations and promoted a low-key understanding with the United States that stopped short of diplomatic relations.

Inside Iran, Ahmadinejad's remarks have been criticized by some of his conservative allies, who fear he is hurting the country's image. Moderate Iranians have called on the ruling Islamic establishment to rein in the president.

But Supreme leader Ayatollah Ali Khamenei, who has the ultimate say, has backed Ahmadinejad's calls for Israel's elimination.

Ahmadinejad criticized the United States for refusing to sell Iran spare parts for its civilian planes as part of its long-standing embargo against the country.

Iran has suffered a series of plane accidents most recently on Dec. 6, when an aging U.S.-made military transport plane crashed into a tall building in Tehran, killing 115 people. Iranian officials have blamed Washington for the crashes, saying they are partly caused by the difficulty in obtaining spare parts.

"No country is authorized to impose spare-part sanctions against another country. Nothing can justify this," Ahmadinejad said Wednesday.

Ahmadinejad said the denial of spare parts was a reason why Iran would not trust Western promises to give it nuclear fuel. The country is currently at loggerheads with the West over its insistence on enriching uranium to fuel its first nuclear reactor, which is due to start generating electricity next year.

The Europeans, with U.S. backing, do not trust Iran to have its own enrichment process since highly enriched uranium can be used for nuclear warheads. Europe has offered to sell enriched uranium for the reactor, but Iran has rejected this.

The United States is pushing to have Iran referred to the U.N. Security Council, where it could face sanctions for violating a nuclear arms control treaty.

Ahmadinejad said that if Iran gave in on the nuclear dispute, there was no guarantee the West might not refuse to sell nuclear fuel in the future.

"I assure you that we won't step back one inch from our nuclear rights," the president told the crowd, drawing chants of "Death to America!"