Iran's defence spending would more than double under plans set out by President Mahmoud Ahmadinejad on Wednesday, February 1.

The president said the public budget for 2012-13 was worth around $90 billion, with an increase of 127 per cent in the defence budget. The public budget covers items like wages, subsidies and development projects.

"The total budget is around 510 trillion tomans (around $415 billion), of which 400 trillion tomans covers state firms and entities," Ahmadinejad told lawmakers in a speech broadcast live by state radio, AFP reported.

Tension with the West rose last month when Washington and the European Union imposed the toughest sanctions yet in a drive to force Tehran to curb its nuclear work. The measures target the ability of OPEC's second biggest Oil producer to sell its crude.

Iran has suggested it will fight sanctions with sanctions, with the oil minister saying the Islamic state would soon stop exporting crude to "some" countries. Iran has repeatedly said it could close the Strait of Hormuz shipping lane if sanctions prevent it from exporting crude, a move in the vital waterway which Washington said it would not tolerate.