Iran's supreme leader Ayatollah Ali Khamenei on Wednesday slammed a US Middle East peace plan as a "great betrayal of the Islamic world," and warned Gulf rivals not to back it. 

Washington is gearing up to roll out economic aspects of its long-awaited plan for peace between the Israelis and Palestinians - dubbed the "deal of the century" - at a conference in Bahrain later this month.

"The aim of this conference is to realize America's traitorous, dastardly plan on Palestine which they have named the 'deal of the century,'" Khamenei said in a live TV address at prayers for the Eid al-Fitr holiday. 

"The 'deal of the century' will, god willing, never take root ... this is a great betrayal of the Islamic world. We hope the leaders of Bahrain and Saudi [Arabia] will realize into what a quagmire they are stepping and how harmful it will be for their future."

The peace plan, fronted by US President Donald Trump's son-in-law Jared Kushner, has already been rejected by the Palestinians, who say the White House's policies have been blatantly biased in favor of Israel.

US allies Saudi Arabia and the United Arab Emirates are set to attend the Bahrain conference on June 25 and 26, but the Palestinians are boycotting it and have encouraged other Arab states to stay away. Palestinians have cut off all contacts with the US since Trump broke with decades of bipartisan policy to recognize Jerusalem as the capital of Israel in December 2017.

In comments released on his ­official website Wednesday, Khamenei ­insisted Iran did not seek to "throw Jews into sea" and saw a referendum as the solution to the Palestinian-Israeli ­conflict.

"The view of the Islamic republic, contrary to past Arab leaders who believed that Jews should be thrown into the sea, is not so," Khamenei said in a speech to state officials. 

He repeated Iran's proposal of holding a vote with the participation of "Muslim, Christian and Jewish residents of Palestine as well as Palestinian refugees" on a system of government.

He added that "the struggle of the Palestinian nation must continue" until a referendum is held.

Trump said he was prepared to talk to Iranian President Hassan Rouhani but that there was always a chance of US military action against Iran.

When asked if he thought he would need to take military action, he said, "Do I want to? No. I'd rather not. But there's always a chance."