Ahmadinejad also said that even the Islamic republic's arch-foe Israel would be unable to do a "damn thing" about Iran's nuclear programme.
He reiterated that as far as Tehran is concerned, the nuclear issue is "over" and said the Islamic republic will "not back down from its rights."
"The Iranian nation will by itself make the 20 percent (nuclear) fuel (enriched uranium) and whatever it needs," the hardliner announced in a speech broadcast live on state television from the central city of Isfahan.
It was unclear whether the cabinet had taken a formal decision on enriching uranium to 20 percent, as on Sunday he had announced his government would meet on Wednesday to consider such a proposal.
Enriched uranium lies at the heart of Iran's nuclear controversy as the material can be used to power a nuclear reactor as well as to make the core of an atomic bomb. Iran denies having such ambitions.
Neither Israel — widely believed to be the sole nuclear-armed power in the Middle East, albeit undeclared — nor the United States has ruled out military action against Iran over its atomic ambitions.
"The Zionist regime is nothing. Even its masters cannot do a damn thing," Ahmadinejad said on Wednesday, a day after declaring: "Any finger which is about to pull the trigger will be cut off."
Ahmadinejad came down heavily on Western powers and Israel in his speech, accusing them of using against Tehran what he said was an Iranian proposal to exchange its low-enriched uranium (LEU) in return for 20 percent enriched material.
"They want to use against us what we proposed ourselves," he said in the province where Iran's flagship uranium enrichment plant is located in the city of Natanz.
He also said that Iran will build 10 more plants of the size of Natanz.
World powers had backed a proposal brokered by the UN atomic watchdog under which Iran would send most of its LEU to Russia and France for conversion into nuclear fuel for a research reactor in the capital.
But Tehran rejected the proposal last month, insisting that it wanted to hand over its LEU at the same time it receives the 20 percent enriched uranium, and that the handover must take place inside Iran.
Since then tension between Tehran and world powers has heightened as world powers object to Iran enriching uranium on its own, fearing it could divert its stock of LEU to make atomic weapons.
Iran's long-time nuclear partner Russia has also been talking of backing further sanctions against Tehran if it fails to convince world powers of its intentions.
Tehran is already under three sets of UN Security Council sanctions for failing to halt uranium enrichment at Natanz.
Late on Tuesday, Ahmadinejad lashed out at Moscow for voting against Iran in an International Atomic Energy Agency (IAEA) vote last week that censured Tehran for building a second uranium enrichment plant.
Iran is building the new facility deep inside a mountain near the Shiite shrine city of Qom, and disclosure of its existence outraged Western powers.
In a rare tirade against the country that is building Iran's first nuclear power plant in the Gulf port of Bushehr, and which had also been expected to deliver advanced air-defence missiles to Iran, Ahmadinejad said on Tuesday Russia had made a "mistake" in its vote at the IAEA.
"Russia made a mistake. It does not have an accurate analysis of today's world situation," he said.
Ahmadinejad vowed that despite the IAEA vote setback Western powers would not succeed in isolating Iran, and dismissed any possibility of military action against it.
