The House of Representatives passed legislation Tuesday that tightens existing sanctions on Iran, specifically on companies that invest more than $20 million in the Islamic regime, including in its oil industry.

The bill, which makes it harder to conduct import-export actions with Iran, passed on a 397-16 vote. Sponsored by Foreign Affairs Committee Chairman Tom Lantos, D-Calif., it already had 326 cosponsors in the 435-member body before the legislation was brought to a tally.

The legislation directs President Bush to determine whether the Iranian Revolutionary Guard Corps, the country's elite paramilitary forces, should be designated a foreign terrorist organization, placed on the list of designated global terrorists or placed on the list of weapons of mass destruction proliferators and supporters.

It also gives money to the Treasury Department's Office of Terrorism and Financial Intelligence, which monitors and cuts off the flow of money to terror groups.

The president also is authorized under the bill to reduce U.S. contributions to the World Bank in direct proportion to funds provided by the bank to entities and projects in Iran. It also restricts nuclear cooperation with countries aiding Iran's nuclear program or transferring advanced conventional weapons there.

The House action preceded Senate consideration of a resolution to designate the IRGC a terror organization. An amendment to the defense authorization bill, the resolution was being debated as Ahmadinejad was to take the stage at the U.N. General Assembly's opening session. It follows a day of appearances by Ahmadinejad in which he denied that Iran has homosexuals, called Israel an oppressive regime and refused to comment on the role Iranian-based weapons are playing in the killing of U.S. soldiers in Iraq.

The measure by Sens. Joe Lieberman, D-Conn., and Jon Kyl, R-Ariz., would be nonbinding but the co-sponsors noted that it's necessary to show Iranian President Mahmoud Ahmadinejad that his brand of tyranny would not be overlooked.

Lieberman said he wants to act "while this tyrant is in town to tell him the Senate is not fooled by his prevarications yesterday at Columbia (University)." He added that lawmakers have the evidence that the IRGC has "the blood of Americans on its hands."

A key Democratic aide familiar with the legislation said that the House bill is designed to prevent the Bush administration from "ratcheting up" the military pressure on Iran while economic pressure is placed on the country. The legislation specifically states the president does not have congressional authority to declare war on Iran.

In the Senate, some Democrats said they wanted to make sure that the resolution was not a drumbeat toward war.

"Rattling sabers I don't think is the way to handle diplomacy," said Senate Majority Leader Harry Reid, D-Nev., who said he would still like to negotiate with Ahmadinejad or others in Iran. "I think the best way is to see what we can do to work something out. And that's what I think the world community is crying for."

But not all lawmakers who agree with the House bill were ready to remove military force from a list of options available to confront the terror-sponsoring nation. Rep. Mike Pence, R-Ind., said the speech given by Ahmadinejad at Columbia University gives Americans a window into the Orwellian mind of the Iranian leader and demonstrates why force must remain on the list of U.S. possibilities.

"We must use all of our power to isolate this dangerous regime and keep all options on the table," he said.

Rep. Chris Shays, R-Conn., said if the U.S. doesn't want war with Iran, then the sanctions need to work.

FOX News' Chad Pergram contributed to this report.