"Mr. Barak has once again underlined the fact that Israel cannot accept that Iran acquires nuclear (capability). Israel refuses to rule out any options" in its handling of the issue, the defence ministry statement said, an allusion to a previously-stated threat to use force.

"The United States must continue to impose effective economic sanctions on Tehran with the goal of preventing Iran from building nuclear arms," Barak told Rice during their meeting, according to the release.

Rice arrived in Tel-Aviv on Monday in a bid to kickstart stalled Middle East peace negotiations.

Israel, the region's sole if undeclared nuclear armed state, considers Iran its main strategic threat because of its nuclear programme, which Israel and its staunch US ally suspect is aimed at developing weapons.

Iran has repeatedly denied the allegations, insisting its nuclear drive is aimed solely at providing electricity for its growing population when its fossils fuels run out.

The United States has never ruled out military action against Iran over its defiance of international demands for it to freeze uranium enrichment, but so far is pursuing the diplomatic route.

"The position of the United States is well known. They do not want, for the time being, any (military) action against Iran," Israeli Defence Minister Ehud Barak told army radio on August 13.

"Our position is that no option is to be taken off the table but in the meantime we have to make diplomatic progress," he said.