By Mohammed Abbas

LONDON (Reuters) - Argentina stepped up its row with Britain over the Falklands on Wednesday with its foreign minister thanking God for the decline of the British Empire and vowing to prosecute oil firms exploring off the remote South Atlantic islands.

In a defiant news conference, held in London but conducted in Spanish, Hector Timerman called Britain the "greatest colonial empire from the 19th century ... that thank God has been defeated worldwide".

He insisted the islands' roughly 3,000 British inhabitants should not be referred to as Falklanders, but as "British inhabitants of the Malvinas islands", the name Argentina uses for the remote territory some 300 miles off its coast.

Timerman has refused to meet British Foreign Secretary William Hague to discuss the islands because of Britain's insistence that Falklands residents be present, part of what London says is their right to self-determination, but a condition Timerman referred to as an "ultimatum".

"The United Nations is very clear. Self-determination applies to a native people, not to people that have been implanted," he said at a news conference titled "Meeting of European Pro-Dialogue Groups on the Malvinas Question".

"I have left an invitation for him (Hague) to go to Buenos Aires without any ultimatum, without any conditions so that we can meet as two friendly countries for dialogue," he added, speaking through a translator at the ambassador's residence.

Britain fought a 10-week war to eject Argentinian forces who invaded the islands in 1982. The Falklands are part of Britain's self-governing territories, and Buenos Aires has ramped up efforts to stake its claim to the territory as London-listed firms seek to tap oil and gas deposits around the islands.

Timerman arrived in London this week to make the case for Argentine ownership of the islands, but has met a mostly hostile response, with British lawmakers on Tuesday accusing him of "megaphone diplomacy" and using "offensive" arguments.

Hague said it was a shame Timerman was unwilling to attend a meeting with him and Falkland Island representatives.

"There is no way such a conversation could have taken place without members of the Falkland Islands government being present, especially given the current Argentine government's behavior towards the Islanders. It is, and must always be, for them to decide their own future," Hague said in a statement.

A referendum on the Falklands' future is scheduled for March, a vote in which the islanders are almost certain to choose to remain British, and which Timerman likened to asking Israeli settlers whether they want to be Israeli or Palestinian.

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