US President Barack Obama has said US-led sanctions had reduced Iran's economy to a "shambles, " in a robust defence of his policy towards Tehran following sharp Republican attacks.

Obama had previously been reticent in responding to Republican campaign attacks over his efforts to deter Iran's nuclear programme, but addressed the issue at a fundraising event in New York, a centre of the US Jewish community.

Yesterday, he said that he had mobilised the world and built an "unprecedented" sanctions regime targeting Iran to state "unequivocally that we're not going to tolerate a nuclear weapon in the hands of this Iranian regime."

"We've been able to organise folks like China and Russia that previously would have never gone along with something like this," Obama said, referring to the support for sanctions of fellow UN Security Council permanent members.

"And it's been so effective that even the Iranians have had to acknowledge that their economy is in a shambles."

"When I came into office, Iran was united and the world was divided. And now what we have is a united international community that is saying to Iran, you've got to change your ways."

But Obama admitted that Iran had not yet decided to throw open its nuclear program to international scrutiny in a way that would help it move out of isolation.

Obama spoke hours after European Union nations agreed to sanction Iran's central bank, freezing assets used to finance its nuclear drive, in a move that further penalised and isolated the Islamic state.

The US leader signed into law a new set of US sanctions last month which target Iran's oil sector and seek to make foreign firms choose between doing business with Tehran or the United States.

Republicans seeking to turf Obama out of office in November's election have savaged his approach on Iran, saying that it shows weakness and have even said that the president has failed to prepare for the possibility of a military attack against Tehran's nuclear programme.