"The Zionist regime and the Zionists are a cancerous tumour. Even if one cell of them is left in one inch of (Palestinian) land, in the future this story (of Israel's existence) will repeat," he said in a speech in Tehran marking Iran's Quds Day that was broadcast on state television.
"The nations of the region will soon finish off the usurper Zionists in the Palestinian land.... A new Middle East will definitely be formed. With the grace of God and help of the nations, in the new Middle East there will be no trace of the Americans and Zionists," he said.
The diatribe took place amid heightened tensions between Israel and Iran over Tehran's disputed nuclear programme.
The Jewish state has in recent weeks intensified its threats to possibly bomb Iran's nuclear facilities to prevent it having the capability to produce atomic weapons.
Iran, which is suffering under severe Western sanctions, denies its nuclear programme is anything but peaceful. Its military has warned it will destroy Israel if it attacks.
"They (the Israelis) know very well they don't have the ability" to successfully attack Iran, foreign ministry spokesman Ramin Mehmanparast was quoted as saying by the ISNA news agency.
"If they make a mistake, our nation's reaction will lead to the end of the Zionist regime," he said.
State television showed crowds marching under blazing sunshine in Tehran and other Iranian cities to mark Quds Days, whose name, derived from Arabic, designates the city of Jerusalem, the disputed future capital of both the Israelis and the Palestinians.
Demonstrators held up Palestinian flags and pictures of Iran's supreme leader, Ayatollah Ali Khamenei, and banners reading "Death to Israel" and "Death to America." A group in Tehran was shown burning an Israeli flag.
The marches have been an annual event during the Muslim holy month of Ramadan in Iran, ever since the 1979 Islamic Revolution.
They underline Iran's antipathy to Israel and its ally the United States, and support for the Palestinian cause, which Khamenei on Wednesday called "a religious duty."
The supreme leader described Israel as a "bogus and fake Zionist outgrowth" in the Middle East that "will disappear."
The head of Iran's powerful Revolutionary Guards, General Mohammad Ali Jafari, told the Fars news agency as he attended the Tehran rally that "the Iranian nation has always been at the forefront of the (regional anti-Israeli) resistance in showing its animosity with Israel."
He added that Iran intended to maintain that virulent stance.
Ahmadinejad, in his speech, claimed that "Zionists" triggered the first and second world wars, and had "taken control over world affairs since the moment they became dominant over the US government."
He asserted that major governments, banks and media were in thrall to a Zionist cabal whose aim was to "destroy the cultures, values and sovereignty of nations."
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