Iranian President Mahmoud Ahmadinejad said Friday that this week's Mideast peace talks as well as Israel itself were 'doomed to collapse' as millions of Iranians were expected to turn out for state-organised anti-Israel rallies.

Iran marks the last Friday of the fasting month of Ramadan as Quds Day, during which the nationwide rallies are held. This year's rallies coincided with the first direct Middle East peace talks in almost two years, which were held in Washington.

The highlight of Quds Day was Friday prayers at Tehran University, where Ahmadinejad held the first sermon.

The president told the worshippers that the future of the Palestinian territories would be determined by the Palestinians themselves 'and not in Washington, London or Paris'.

'These talks are doomed to fail as the agenda of the talks is irrelevant and not focusing on the main issue, which is the withdrawal of Zionists from Palestinian lands,' Ahmadinejad said.

'But more important is that the Zionist regime itself is doomed to collapse anyway,' said the president, who in the past has provoked international condemnation for calling for Israel to be eradicated from the Middle East map and questioning the Holocaust.

Iran does not recognise Israel's sovereignty and said the only pragmatic option to resolve the Middle East conflict would be a referendum for all Palestinians, including the millions of refugees, to determine their fate.

According to Iranian state media, millions of people were expected to attend Friday's rallies.

During the demonstrations, the pro-government Basij militia group was to distribute two videogames to reach out to the younger generation and expose 'Zionists' crimes and atrocities in Palestine', state television reported.

One of the games was based on the May 31 Israeli commando raid on an aid flotilla trying to break the blockade of the Gaza Strip. It killed nine activists.

The Quds Day rallies were held after US President Barack Obama hosted Palestinian President Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu Thursday for peace talks.

Abbas and Netanyahu pledged to reach a peace agreement in a year's time, hold a second round of talks Sep 14-15 in the Middle East and meet every two weeks thereafter.

Iranian leaders, however, downplayed the importance of the negotiations.

Foreign Ministry spokesman Ramin Mehmanparast Friday described the Washington meeting as 'futile compromise talks' and told the ISNA news agency that 'the Palestinians were smarter than being deceived by this kind of theatre'.

Parliament Speaker Ali Larijani told state television Friday that 'the dilemma could not be settled by theatrics staged in Washington as the Palestinian issue was not a toy but a very serious matter which solely had one solution: giving Palestinians back their rights'.

At prayers, Ahmadinejad called on the West to drop its support of Israel to gain more trust in the Middle East.

'If you do not stop supporting the Zionists, then you would be regarded as accomplices of the Zionist crimes and forced to face the consequences accordingly,' Ahmadinejad warned at the university, which was the object of a heavy security deployment Friday.

In a change from last year's rallies, no opposition protests were observed by journalists or reported on opposition websites.

The opposition accused the government of fraud in last year's presidential vote, which led to Ahmadinejad's re-election. It organised a series of demonstrations, and the government responded with deadly crackdowns. There have been no street protests since December.