Israeli Prime Minister Benjamin Netanyahu praised the European Union on Tuesday for the latest round of sanctions imposed on Iran, but reserved judgment on whether it would halt its nuclear drive.

"I would like to commend the European Union on the harsh sanctions it adopted yesterday (Monday) against the greatest threat to peace in our time," he told EU diplomats in Jerusalem, in remarks communicated by his office.

"These are serious sanctions against Iran," he said.

"When the centrifuges stop spinning and the Iranian nuclear programme is halted, we shall know that they have achieved their aim," he added.

"I believe that all those who seek to ensure world peace and security share this aim, not only in the Middle East but throughout the world. These are momentous issues and momentous times," Netanyahu said.

Israel and much of the West believe that Iran is using its nuclear programme to develop an atomic weapons capability. Iran denies this, and says its activities are purely peaceful.

Israel, the Middle East's sole, if undeclared, nuclear power, has refused to rule out a military strike to prevent that from happening.

Netanyahu also addressed the situation in Syria, and told the envoys the transfer of Damascus' chemical weapons to Hezbollah or other militias would force Israel to consider military action.

An Israeli official who attended the meeting cited Netanyahu as saying that, "at the moment, the (chemical) weapons are under the state's control. But if that changes we might have to act."

"He said Israel could not allow these chemical weapons to fall in the hands of extremists such as Hezbollah or Al-Qaeda, or other such groups, and that Israel reserved the right to act in such a situation," the official told AFP.

In July, Netanyahu and other senior Israeli officials raised the possibility of military action to prevent Syrian chemical weapons from falling into the hands of the militia of the Lebanese Shiite party Hezbollah.

On a separate front, Netanyahu also said "the Egyptian-Israeli peace agreement must be maintained," the official told AFP.

"Israel is committed to maintaining the agreement. We hope the other side is also committed," the official cited Netanyahu as telling the diplomats.

"He said keeping the agreement is also of importance since it shows that signed agreements are kept, and that's good for peace in the future," said the official.

Egypt was the first Arab country to sign a peace treaty with Israel, in 1979.

The Israeli premier also congratulated the EU on receiving the Nobel Peace Prize.

"Would that we could replicate in the Middle East what was achieved in Europe," Netanyahu said. "That is, decades of stability and peace and tranquility."

Israel and the Europeans do not always see eye to eye.

Brussels is vocally opposed to Israeli settlement construction in the West Bank and east Jerusalem and regularly condemns such activity.

Last month, a planned meeting between Netanyahu and EU foreign policy chief Catherine Ashton on the sidelines of the United Nations General Assembly failed to take place because of scheduling conflicts.