Westerwelle told Deutschlandfunk radio that Iran would be judged by its actions and not by its words, and that only a serious return to negotiations would prevent further measures such as sanctions being imposed on the Islamic Republic.
For the past two years Iran has repeatedly bluffed and played tricks, Westerwelle said.
It has played for time and of course we in the international community cannot accept a nuclear-armed Iran.
Iranian President Mahmoud Ahmadinejad said on Tuesday his country was ready to send low-enriched uranium (LEU) abroad to be converted into fuel for a Tehran nuclear medicine reactor to show its nuclear aims were purely peaceful.
On Thursday, China said this signalled a shift in Iran's position which meant it was worth continuing negotiations rather than discussing broader sanctions against Tehran.
But diplomats said Iran had not conveyed any change in its stance to the U.N.'s International Atomic Energy Agency (IAEA).
A nuclear armed Iran would not only be a threat for the countries in the region, it would above all preoccupy the international community and threaten stability with a nuclear arms race, Westerwelle said.
Westerwelle will meet his Russian counterpart Sergei Lavrov later on Friday, before heading to the three-day Munich Security Conference where he will join top European and U.S. diplomats discussing global defence and security issues.
Of course we will talk about this in Munich, and if Iran brings new proposals to the table, then we will also talk about them. But actions must follow, he said.(Reporting by Brian Rohan, Michael Nienaber; editing by Philippa Fletcher)