"I know President Bush well ... From his standpoint, a nuclear Iran, ayatollahs with a bomb, is unacceptable," Danny Ayalon told Israel's Ma'ariv newspaper.

"I have been privileged to know him well, he will not hesitate to go all the way if there is no choice."

Concern over Iran's atomic ambitions figured prominently in talks in Washington this week between Bush and Israeli Prime Minister Ehud Olmert.

The US and allies including Israel have accused Iran of pursuing nuclear weapons under the guise of a civilian energy program. Iran denies the accusation.

Ayalon, who has spent the past 4-1/2 years in Washington, said Bush would continue to pursue diplomatic efforts for now, and failing that would chose to try to isolate Iran via sanctions.

But if that tactic also failed to stem Iran's nuclear plans, Ayalon said Bush would likely use air power combined with limited ground forces to attack Iran.

"Anyone who knows President Bush knows that he is very determined. He is convinced of the moral supremacy of democracies over dictatorships ... If the sanctions succeed, all the better. Otherwise, he will act by all means possible, including military action," he said.

In public, Bush has said he backs a diplomatic solution with Iran but has refused to rule out a military strike.

The Islamic republic has said it is willing to talk to the US, but that Washington must first "change its attitude."

Asked if the United States would be capable of taking military action against Iran, given that it is already engaged in a debilitating conflict in Iraq, Ayalon said:

"This is not an operation on the same scale. There is no intention of employing large ground forces. That is not the model. This is more a case of employing air power combined with limited ground forces."

Earlier US Secretary of State Condoleezza Rice on Tuesday said neither Iran nor Syria appeared interested in helping stabilise Iraq or the Middle East as she played down the idea of direct talks.

"There is no lack of opportunity to talk to the Iranians. I think the question is: is there anything about Iranian behaviour that suggests that they are prepared to contribute to stability in Iraq and I have to say that at this point, I don't see it," Rice told reporters as she flew to Hanoi for the Asia Pacific Economic Cooperation regional summit.

Her plane stopped at Ramstein Air Base in Germany for a routine refuelling.

British Prime Minister Tony Blair and former US secretary of state James Baker, who is co-chairing an independent panel studying US policy in Iraq, have suggested talks with both nations as a way to curb the violence in neighbouring Iraq.

The United States has accused Iran and Syria of helping to fuel the Iraqi insurgency. Both have denied doing this.

Rice did not rule out talks with Iran about Iraq, noting there is a channel between the US and Iranian ambassadors to Iraq "that, at some point, it could make sense to activate." But she made clear she saw little profit in such discussions.