"We have prepared ourselves for any situation, even if war happens," Deputy Foreign Minister Manouchehr Mohammadi told the ISNA news agency

"Iran is ready for negotiations without preconditions with the United States, but the Americans have not accepted it yet," he added.

"We have had unofficial meetings with Americans over Afghanistan and Iraq, but they say first Iran should accept US conditions and then talks take place."

US Secretary of State Condoleezza Rice has insisted she would only hold talks with her Iranian counterpart if Tehran first agreed to a suspension of sensitive nuclear activities.

Mohammadi said that if the UN Security Council adopted a second resolution imposing sanctions over Iran's controversial nuclear programme, Tehran would press on with its atomic drive.

"If the second resolution is issued we will not react and Iran will continue its nuclear work," said Mohammadi

US Vice President Dick Cheney reignited speculation of US military intervention in Iran when he said Washington favours a diplomatic approach to Tehran's atomic programme but that "all options are still on the table."

The United States and Israel accuse Iran of seeking nuclear weapons. Tehran denies the charges, insisting its atomic programme is peaceful in nature.

Despite the Bush administration's insistence it has no plans to go to war with Iran, a Pentagon panel has been created to plan a bombing attack that could be implemented within 24 hours of getting the go-ahead from President George W Bush, The New Yorker magazine reported in its latest issue.

The special planning group was established within the office of the Joint Chiefs of Staff in recent months, according to an unidentified former US intelligence official cited in the article by investigative reporter Seymour Hersh in the March 4 issue.

The panel initially focused on destroying Iran's nuclear facilities and on regime change but has more recently been directed to identify targets in Iran that may be involved in supplying or aiding militants in Iraq, according to an Air Force adviser and a Pentagon consultant, who were not identified.

The consultant and a former senior intelligence official both said that US military and special-operations teams had crossed the border from Iraq into Iran in pursuit of Iranian operatives, according to the article.

In response to the report, Pentagon spokesman Bryan Whitman said: "The United States is not planning to go to war with Iran. To suggest anything to the contrary is simply wrong, misleading and mischievous.

"The United States has been very clear with respect to its concerns regarding specific Iranian government activities. The president has repeatedly stated publicly that this country is going to work with allies in the region to address those concerns through diplomatic efforts," Whitman said.

Pentagon officials say they maintain contingency plans for literally dozens of potential conflicts around the world and that all plans are subject to regular and ongoing review.

The article, citing unnamed current and former US officials, also said the Bush administration received intelligence from Israel that Iran had developed an intercontinental missile capable of delivering several small warheads that could reach Europe. It added the validity of that intelligence was still being debated.

The article also included an interview conducted in December with Hezbollah leader Sayyed Hassan Nasrallah, who said that while he had no interest in initiating another war with Israel, he was anticipating and preparing for another Israeli attack sometime this year.