Israel is denying a report in a British newspaper that it plans to attack Iran. But Israel has not ruled out a military strike.
Israel reacted swiftly to a report in London's Sunday Times that it plans a combined air and ground attack on Iran in March, if Teheran does not halt its nuclear program.
"This is ridiculous. I do not know of any decision. I think it is entirely baseless," said Israeli Deputy Prime Minister Ehud Olmert.
But Mr. Olmert told reporters that there is cause for concern.
"It is true that Israel is entirely, entirely unhappy about the developments with Iran," he said.
He said the first step is diplomacy, and the U.S. and Europe should take the lead.
"We believe that this is the ultimate responsibility of the international community," he added. "There are contacts, negotiations and initiatives to move it forward to the United Nations Security Council, and I hope that it will come there soon.
There is a precedent for a preemptive strike. The Israeli air force destroyed Iraq's nuclear reactor in 1981. Foreign Minister Silvan Shalom said Israel cannot allow Iran to obtain atomic weapons.
"It would be a nightmare for all of us if this kind of regime will hold a nuclear bomb," he said. "It will destabilize not only our region it will destabilize the whole world. And that's why all of us should be united in these days."
Israel has grown increasingly alarmed about Iran's nuclear program since late October, when the Iranian president publicly called for the Jewish state to be "wiped off the map." According to Israeli military intelligence, Iran will reach the "point of no return" in developing a nuclear weapon next year.
Israeli officials say if diplomacy fails, there is a military option, but have not specified what action they will take.