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Ahmadinejad, who just a week ago had suggested that Iran was ready for a new relationship with the United States, blamed America and its allies for a long list of ills, including the world economic crisis. He suggested that the Western model of economic liberalism was exhausted and that Western leaders, in their efforts to contain the crisis, "are simply thinking about maintaining power and wealth."

Turning to Israel, he started by asking why the five permanent members of the U.N. Security Council have so much power over other nations. Although such powerful countries condemn racism in words, he said, by their deeds they "ridicule and violate all laws and humanitarian values."

"Following World War II," he continued, according to an official English-language text of his remarks, "they resorted to military aggression to make an entire nation homeless, on the pretext of Jewish sufferings and the ambiguous and dubious question" of the Holocaust. "They sent migrants from Europe, the United States and other parts of the world, in order to establish a totally racist government in occupied Palestine," he said, "and in fact, in compensation for the dire consequences of racism in Europe, they helped bring to power the most cruel and repressive racists, in Palestine."

Ahmadinejad said Zionist supporters enjoy undue influence over Western governments, imposing "their domination to the extent that nothing can be done against their will," and he suggested that the only solution is to defeat them. "So long as Zionist domination continues, many countries, governments and nations will never be able to enjoy freedom, independence and security," he said. "As long as they are at the helm of power, justice will never prevail in the world and human dignity will continue to be offended and trampled upon. It is time the ideal of Zionism, which is the paragon of racism, be broken."

British and French diplomats, whose governments had threatened a walkout if they heard anti-Semitic or anti-Israel remarks, left the room. Peter Gooderham, the British ambassador to the United Nations in Geneva, called Ahmadinejad's remarks "outrageous" and "anti-Semitic," according to news reports.

Israel, preparing to mark Holocaust Remembrance Day starting at sundown Monday, derided the U.N. gathering for giving Ahmadinejad a forum. Prime Minister Binyamin Netanyahu called him "a racist and a Holocaust denier who doesn't conceal his intention to wipe Israel off the face of the Earth."

The UN's first conference on racism in the South African city of Durban eight years ago was marred by anti-Semitic comments from some non-governmental organisations. There was also an unsuccessful attempt by some states to equate Zionism with racism.

His presence at a conference against racism has caused horror in Israel, and nervousness within the United Nations, says the BBC's Imogen Foulkes in Geneva.

The draft final declaration, which has been causing much heated debate, has been watered down to remove all references to Israel and the Middle East. However, at the request of Middle East nations, it still contains a clause about the incitement of religious hatred, which many Western countries see as a curtailment of free speech.

US President Barack Obama said anti-Israeli language in the draft final communique that was "oftentimes completely hypocritical and counterproductive" had been the red line for his administration.

EU states are split on whether to follow the US boycott. Germany has become the latest country to announce it would not be attending, joining others including Canada, Israel, Italy, the Netherlands and New Zealand.

Member states, who wrangled for months over the draft document for the Geneva conference, had ultimately removed controversial statements about Israel; about what constitutes defamation of religion, a position pushed by Muslim states; and about compensation for slavery.

Besides the United States, the countries staying away included Germany, Italy, Poland, the Netherlands, New Zealand and Australia. Canada and Israel announced months ago that they would not attend.

“Following World War II they resorted to military aggressions to make an entire nation homeless under the pretext of Jewish suffering,” Mr. Ahmadinejad said, grinning as he spoke, his remarks coincidentally falling on the day that Jewish communities mark the Holocaust. “And they sent migrants from Europe, the United States and other parts of the world in order to establish a totally racist government in occupied Palestine.”

The speech prompted the normally mild-mannered Mr. Ban and other top United Nations officials to voice uncommon criticism of the leader of a member state. “I have not experienced this kind of destructive proceedings in an assembly, in a conference, by any one member state,” Mr. Ban said.“I deplore the use of this platform by the Iranian president to accuse, divide and even incite,” he said, urging members to “turn away from such a message in both form and substance.”

Navi Pillay, the United Nations high commissioner for human rights, criticized Mr. Ahmadinejad for “grandstanding” from a United Nations dais and said his performance should not be an excuse to derail the important topic of the conference. She also made a not-so-subtle dig at Iran’s treatment of its own minorities, after noting that the president’s remarks were outside the scope of the conference. “This is what I would have expected the president of Iran to come and tell us: how he is addressing racial discrimination and intolerance in his country,” Ms. Pillay said.

Israel recalled its ambassador to Switzerland to protest both the conference and meeting Sunday between the Swiss president, Hans-Rudolf Merz, and Mr. Ahmadinejad.

Not everyone at the conference was critical of the speech, which also wandered through topics like the economic collapse and Iraq and Afghanistan. “If we actually believe in freedom of expression, then he has the right to say what he wants to say,” the Pakistani ambassador to the United Nations in Geneva, Zamir Akram, told The Associated Press. “There were things in there that a lot of people in the Muslim world would be in agreement with, for example the situation in Palestine, in Iraq and in Afghanistan, even if they don’t agree with the way he said it.”

The UN high commissioner for human rights, Navi Pillay, was even blunter, describing Iran's leader as "somebody who traditionally makes obnoxious statements" and who had done so once again.The speech almost certainly set back any rapprochement between the US and Iran, at least until the Iranian presidential elections in June, if not beyond.

Diplomats said Ahmadinejad's speech may have been made with the elections in mind, but added it was unlikely that he would have delivered it without the approval of Iran's supreme leader, Ayatollah Ali Khamenei.

Ahmadinejad traced the history of racism in the modern world to the control of a few powerful states and string-pulling Zionists behind them. "Following world war two, [powerful states] resorted to military aggression to make an entire nation homeless, on the pretext of Jewish suffering and the ambiguous and dubious question of the Holocaust .... and they helped bring to power the most cruel and repressive racists in Palestine," he said.

It was at that point that the EU delegates in the chamber rose in unison and filed out, to the competing jeers and applause of the crowd on the assembly floor and in the galleries. They did not stop to hear Ahmadinejad describe Israelis as "those racist perpetrators of genocide".

As soon as the Iranian president had finished speaking, the Europeans walked back into the hall, to make the point that their quarrel was with him and not the aims of the conference.

Ahmadinejad later told a press conference his sole aim was to promote "international love and tolerance". As expected, he gave no hint of compromise over Iran's nuclear programme, declaring the question "closed".

Mr Ahmadinejad spoke on Monday at the start of the five-day UN conference in Geneva. Jewish migrants, he said, had been sent from Europe and the US after World War II "in order to establish a totally racist government in the occupied Palestine".

He continued: "And in fact, in compensation for the dire consequences of racism in Europe, they helped bring to power the most cruel and repressive racist regime in Palestine."

His comments prompted a walk-out by delegates from at least 30 countries, and a raft of condemnation from Western officials. Diplomats who remained, however, applauded as Mr Ahmadinejad continued his address.

Javier Solana, foreign policy chief for the European Union, said in Brussels on Monday that the group would reconsider its relationship with Israel if it did not remain committed to establishing a Palestinian state.

Mr. Lieberman also has few fans in Egypt, which has acted as an intermediary for Israel in several matters. Some months ago Mr. Lieberman complained that President Hosni Mubarak of Egypt had not agreed to come to Israel. “If he doesn’t want to, he can go to hell,” he added.“Imagine that Hossein Mousavi wins the Iranian presidency this spring and he names Mohammad Khatami as his foreign minister,” said Meir Javedanfar, an Iran analyst in Israel, referring to two Iranian leaders widely viewed as in the pragmatist camp. “With Lieberman as foreign minister here, Israel will have a much harder time demonstrating to the world that Iran is the destabilizing factor in the region.”

Secretary of State Hillary Rodham Clinton has already criticized Israeli plans to demolish Palestinian homes in East Jerusalem, and her department has criticized Israel’s banning of certain goods from Gaza.This represents a distinct shift in tone from the Bush era. An internal Israeli Foreign Ministry report during the Gaza war noted that compared with others in the United States, “liberals and Democrats show far less enthusiasm for Israel and its leadership.”

Some Israeli officials say they believe that what the country needs is to “rebrand” itself. They say Israel spends far too much time defending actions against its enemies. By doing so, they say, the narrative is always about conflict.“When we show Sderot, others also see Gaza,” said Ido Aharoni, manager of a rebranding team at the Foreign Ministry. “Everything is twinned when seen through the conflict. The country needs to position itself as an attractive personality, to make outsiders see it in all its reality. Instead, we are focusing on crisis management. And that is never going to get us where we need to go over the long term.” Mr. Gilboa, the political scientist, said branding was not enough. “We need to do much more to educate the world about our situation,” he said. Regarding the extra $2 million budgeted for this, he said: “We need 50 million. We need 100 million.”