Sydney - US Vice President Dick Cheney on Saturday renewed Washington's warning to Iran that "all options" are on the table if the country continues to defy UN-led efforts to end Tehran's nuclear ambitions.

At a joint news conference with Prime Minister John Howard during a visit to Australia, Cheney also said Washington was "comfortable" with Britain's decision to withdraw troops from Iraq and that it was up to Australia to decide if it would do the same.

Cheney said the United States was "deeply concerned" about Iran's activities, including the "aggressive" sponsoring of terrorist group Hezbollah and inflammatory statements by President Mahmoud Ahmadinejad.

He said top US officials would meet soon with European allies to decide the next step toward planned tough sanctions against Iran if it continues enriching uranium.

"We worked with the European community and the United Nations to put together a set of policies to persuade the Iranians to give up their aspirations and resolve the matter peacefully, and that is still our preference," Cheney said.

"But I've also made the point, and the president has made the point, that all options are on the table," he said, leaving open the possibility of military action.

The International Atomic Energy Agency reported on Thursday that Iran had not only ignored a UN Security Council ultimatum to freeze its enrichment program, but had expanded the program by setting up hundreds of centrifuges. Enriched uranium fuels nuclear reactors but, enriched further, is used in nuclear bombs.

The IAEA report came after the expiration Wednesday of a 60-day grace period for Iran to halt uranium enrichment.

Ahmadinejad said on Thursday it was of no importance if countries did not believe Iran's nuclear activities were peaceful, and said the country would resist "all bullies."

Howard said efforts to keep Iran in check would be hampered if the United States and its allies lose the Iraq war.

"I can't think of a country whose influence and potential clout would be more enhanced in that part of the world than Iran's could be if there were to be a coalition defeat in Iraq," Howard said.

On Iraq, Cheney sidestepped a question about whether the White House had asked the British government to redeploy troops into another part of Iraq rather than withdraw them.

British Prime Minister Tony Blair has outlined a plan to withdraw about 1,600 troops from southern Iraq in the coming months, and to reduce Britain's 7,100-strong contingent further by late summer.

"They are going to continue to have a major presence there. They are also ... beefing up their operations in Afghanistan," Cheney said. "So we are very comfortable with that decision."

Britain said Friday it will increase its troop strength in Afghanistan to bolster NATO forces battling Taliban militants, with media reports saying 1,000 soldiers will join the more than 5,000 troops already there.

Cheney declined to say if he had asked Howard during talks held Saturday to add to the 1,400 troops Australian has in and around Iraq.

"It's not for us to stress to our allies what their appropriate response might be," Cheney said, adding there would be no damage to the US-Australian military alliance if Australia did withdraw its troops.

Cheney, due to leave Australia on Sunday, promised that an Australian who has been detained without trial at the US military prison in Guantanamo Bay, Cuba, for more than five years was "near the head of the queue" of possible military trials.

Howard said he had expressed Australia's concern at the length of time it was taking to bring David Hicks, a former kangaroo skinner who was captured in Afghanistan in 2001 on the Taliban side, to trial.

"I can assure you we will be doing everything we can to deal with these matters in as expeditious manner as possible," Cheney said.