Mahmoud Ahmadinejad said that if Germany and Austria felt responsible for the Jewish Holocaust, they should give up land to make room for Israel.
“You oppressed them, so give a part of Europe to the Zionist regime so they can establish any government they want,” he said on a visit to Mecca.
The president’s remarks were quickly condemned by Israel and the US.
“This is not the first time, unfortunately, that the Iranian president has expressed the most outrageous ideas concerning Jews and Israel,” Israeli foreign ministry spokesman Mark Regev said.
Mr Ahmadinejad’s stance drew condemnation from French President Jacques Chirac and German Chancellor Angela Merkel, who were meeting in Berlin.