DUBAI - Iran's supreme leader Ayatollah Ali Khamenei said on Wednesday that U.S. President Donald Trump's peace plan for the Israel-Palestinian conflict was doomed to fail and all Muslim nations should oppose it.

"The devilish and vicious policy of America towards Palestine called the 'deal of the century' will never materialize...all Muslim nations will confront them and will not let it materialize," Khamenei said a tweet written in Farsi.

Trump on Tuesday announced a U.S. peace plan which would set up a Palestinian state with strict conditions but allow Israel to take over long-contested Jewish settlements in the occupied West Bank. Palestinian leaders have rejected it as biased towards Israel.

Opposition to Israel is a cornerstone of Iranian policy, which backs Palestinian Islamist militant groups.

(Writing by Parisa Hafezi; Editing by Angus MacSwan) ((parisa.hafezi@thomsonreuters.com; +90 532 176 3452; Reuters Messaging: parisa.hafezi@thomsonreuters.com))