"Canada will use its G8 presidency to continue to focus international attention and action on the Iranian regime" and "work with its allies to find strong and viable solutions, including sanctions, to hold Iran to account," Harper said in a statement.
"It is time for Iran to end its defiance of the international community, suspend its enrichment activity and take immediate steps toward transparency and compliance by halting the construction of new enrichment sites, and fully cooperating with the International Atomic Energy Agency," he said.
Harper's announcement came as the US Treasury Department ordered a freeze on assets of an individual and four companies linked to Iran's Revolutionary Guard.
US President Barack Obama on Tuesday called for a "significant regime of sanctions" against Iran for seeking to further enrich nuclear materials in defiance of UN Security Council resolutions actions.
In Moscow, the powerful head of Russia's national security council, Nikolai Patrushev, said Tehran's announcement that it had started work to produce 20 percent enriched uranium cast doubt on its claims not to be pursuing weapons.
Patrushev indicated the Kremlin's patience in trying to seek dialogue with Tehran was wearing thin.
Harper said his government is "deeply disturbed" by Iran's decision.
"Iran's past history of deliberately concealing aspects of its nuclear program makes this latest move even more worrying," he added.
Leaders of the Group of Seven industrialized nations, plus Russia, are to meet next in Toronto in June.
