America's top intelligence official said Iran could have a nuclear bomb by 2010 and accused Tehran of being the world's top state sponsor of terrorism.

Director of National Intelligence John Negroponte is seen in this February 2, 2006 file photo. America's leading intelligence official said Iran could have a nuclear bomb by 2010 and has accused Tehran of being the world's top state sponsor of terrorism. [Reuters]

Director of National Intelligence John Negroponte also said lessons have been learned from intelligence failures in the Iraq war.

He pinpointed al Qaeda as still being the greatest security threat to the United States although he claimed that Osama bin Laden is "more circumscribed in his ability to act."

On Iran's nuclear capability, Negroponte said: "The estimate we have made is that sometime between the beginning of the next decade and the middle of the next decade they might be in a position to have a nuclear weapon which is a cause of great concern."

Negroponte said Iran seemed determined to develop nuclear weapons but admitted "We don't have clear-cut knowledge."

"They seem to be determined -- that is our assessment - that they are determined to develop nuclear weapons," he told BBC Radio.

On Thursday, world powers agreed in Vienna on a "far-reaching" package of incentives for Iran to stop nuclear fuel work that could lead to atomic bombs, including an offer to suspend action against it in the U.N. Security Council.

However, Western officials would not spell out what penalties were approved, or their timing or sequencing if the incentives part of the package fell flat.

Iran says its quest for nuclear technology will generate electricity only, not be diverted into secret bombmaking as the West suspects, and has declared the program non-negotiable.

Iranian President Mahmoud Ahmadinejad last week derided the budding incentives package as a bid to trade "candy for gold."

Tehran has also spurned a U.S. offer of direct talks, dramatically added to the incentives packet on Wednesday, 26 years after Washington severed diplomatic ties with Tehran, because it was conditioned on halting uranium enrichment.

In his intelligence assessment, Negroponte said: "They are the principal state sponsor of terrorism in the world. Their behavior has been a cause of concern not only in Lebanon and Israel and in the Palestinian Territories but in Iraq.

But he acknowledged that intelligence mistakes had been made in the past over Iraq and the search for weapons of mass destruction.

"I think we have learned a lot of the lessons from 9/11 as well as from some of the mistakes that were made in the run-up to the Iraq War with respect to weapons of mass destruction," he said.

"I think we have improved the integrity of our analyses substantially. In other words I think we have internalized some of these lessons," he added.

Negroponte said many if not most of the al Qaeda leadership from before the 9/11 attacks on the United States had been "put out of commission."

He believed Osama bin Laden was still alive but added "He is more circumscribed in his ability to act. He doesn't have the safe haven, the platform that he had to operate prior to 9/11."

"The greatest threat in our judgment to the United States, to our interests abroad and our allies is the al Qaeda threat," he said. "It is an asymmetric threat spread throughout a number of different countries."