The United States fears Iran's growing military power because it is now able to compete with Israel and the West, Iranian President Mahmoud Ahmadinejad said in comments carried by an Egyptian newspaper on Monday.

Responding to a toughening stance from the United States and Israel against Tehran, Ahmadinejad accused Washington of inventing conspiracies to discredit Iran and sowing discord with its near neighbour Saudi Arabia.

Yes, we have military capabilities that are different from any other country in the region, Egyptian daily al-Akhbar cited Ahmadinejad as saying. Iran is increasing in capability and advancement and therefore we are able to compete with Israel and the West and especially the United States.

The U.S. fears Iran's capability, he told the paper. Iran will not permit (anyone from making) a move against it.

Iran's Islamic rulers, who say Israel has no right to exist, deny accusations that they are seeking nuclear weapons and have warned they will respond to any attacks by striking at Israel and U.S. interests in the Gulf.

A senior U.S. military official said on Friday Iran had become the biggest threat to the United States and Israel's president said the military option to stop the Islamic republic from obtaining nuclear weapons was nearer.

Ahmadinejad repeated that Iran does not own a nuclear bomb, but said Israel's end was inevitable.

The U.N. nuclear watchdog, the IAEA, is expected this week to issue its most detailed report yet on research in Iran seen as geared to developing atomic bombs. It is Israel that has about 300 nuclear warheads. Iran is only keen to have nuclear capability for peaceful means, he said, accusing Washington of lumping Iran with Syria, the Islamist Hamas movement that rules Gaza and Hezbollah in Lebanon.

The U.S. portrays those four as the Axis of Evil to save the Zionist entity (Israel). But the Zionists are bound to go out of existence, he said.

Responding to a U.S. claim that Iran was involved in a plot to kill the Saudi ambassador to Washington, Ahmadinejad said: Iran is farthest from thinking of carrying out such crimes but the U.S. is always inventing conspiracies against Iran.

The U.S. fears any friendship between us and Saudi Arabia and therefore incites disagreements, he said. To stop the U.S. in its tracks we must deepen the elements of friendship... We are ready for this and the relation between Saudi and Iran already exists and has not been cut off.

(Reporting by Marwa Awad; Writing by Tom Pfeiffer; Editing by Matthew Jones)