TEHRAN - Iran is ready for anything the United States does to stop its nuclear programme, Tehran's foreign minister said on Saturday after the United States maintained it was keeping "all options on the table".

An anti aircraft gun is seen in front of the reactor building of the Bushehr nuclear power plant in southern Iran in February 2006. Israel on Saturday has denied a report in a British daily that it is seeking permission from the United States to fly its bombers over Iraq to attack Iran's nuclear facilities. [AFP]

The five permanent members of the United Nations Security Council plus Germany will meet in London next week to discuss whether to strengthen sanctions on Iran after it failed to meet a U.N. February 21 deadline to halt uranium enrichment.

Iran insists it has the right to nuclear power to generate electricity, but the West suspects Tehran is really trying to building an atomic arsenal.

While U.S. leaders say they want a diplomatic solution to the nuclear dispute with Iran, Washington officials are careful not to rule out military force to stop the Islamic Republic becoming a nuclear power.

"We are ready for any possible option taken by America," Iranian Foreign Minister Manouchehr Mottaki told reporters.

Once seen as vulnerable, squeezed between a U.S. military presence in both Iraq and Afghanistan, Iran is increasingly confident now that the Iraqi and Afghan insurgencies have tied up the United States in increasingly costly wars.

"We do not see America in a position to impose another crisis on its tax-payers ... by starting another war in the Middle East," Mottaki said.

But U.S. Vice President Dick Cheney, in talks with Australian Prime Minister John Howard, said the United States and its allies were pursuing diplomacy as their preferred course on Iran but repeated that "all options were on the table".

"We believe it would be a serious mistake if a nation such as Iran were to become a nuclear power," he told reporters in Sydney.

The Weekend Australian newspaper reported on Saturday that Cheney had endorsed U.S. Republican Senator John McCain's proposition that the only thing worse than a military confrontation with Iran would be a nuclear-armed Iran.

TALKS OR PUNISHMENT?

Britain's Daily Telegraph, citing an unnamed senior Israeli defence official, said on Saturday that Israel had sought U.S. permission to use an "air corridor" in Iraq if the Jewish state decided to launch air strikes on Iranian nuclear facilities.

"We are planning for every eventuality, and sorting out issues such as these (airspace passage) are crucially important," the Daily Telegraph quoted the Israeli official, who spoke on condition of anonymity, as saying.

"If we don't sort these issues out now we could have a situation where American and Israeli war planes start shooting at each other," he said.

But Israeli Deputy Defence Minister Ephraim Sneh denied the report. "No such approach has been made -- that is clear," he told Israel Radio.

"Those who do not want to take political, diplomatic, economic steps against Iran are diverting attention to the mission we are supposedly said to be conducting," Sneh said.

Iran says it wants to negotiate with the Europeans and even Washington but refuses to give up its right to enrich uranium guaranteed by the nuclear Non-Proliferation Treaty.

"We want the London meeting to make a brave decision and resume talks with Iran to find a way to preserve Iran's right," Mottaki said.

Western nations say the fact that Iran kept its nuclear programme secret for 18 years until 2002 and its lack of cooperation with U.N. inspectors show its ill intent.

The London meeting of Security Council members could add a travel ban on senior Iranian officials and restrictions on non-nuclear business to existing sanctions banning of transfers of nuclear technology.

But harsher sanctions could face serious obstacles, as Russia, China and some EU powers prefer further dialogue with Iran to Washington's push to isolate and punish.