The Israeli daily Haaretz cited defence minister Shaul Mofaz as telling Israel radio's Persian service last week that if a decision was made to destroy Iran's nuclear capability, "necessary steps will be taken so that Iranian citizens will not be harmed".
Since the collapse of Saddam Hussein's rule in Iraq, Israel has come to regard the Islamic government in Tehran as its number one enemy.
This is despite Iran's acceptance of a tough new international inspections regime for its nuclear facilities last week.
Meir Dagan, head of Israel's Mossad overseas intelligence service, told MPs last month that Iran's nuclear programme posed the biggest threat to the existence of Israel since its creation on the land of Palestine in 1948.
Dagan said Israel had discovered in recent months that Iran was close to finishing construction of a uranium enrichment plant in the central Kashan area, which could eventually give it the capacity to build around a dozen nuclear bombs.
"If a decision was made to destroy Iran's nuclear capability, necessary steps will be taken so that Iranian citizens will not be harmed"
Israeli defence minister
The Iranian-born Mofaz said in a speech at a security conference near Tel Aviv that Iran was "a terror-supporting country".
In a visit to Washington in November Mofaz called Tehran's nuclearisation "insufferable".
Iran won plaudits from the international community by signing
on Thursday the additional protocol of the nuclear Non-Proliferation Treaty which opens the way for snap UN inspections of suspect sites.
Its acceptance of the protocol was part of a deal brokered by
Britain, France and Germany in October to address US-led concerns about its nuclear programme.
Israel is the only country in the Middle East which is known to have nuclear weapons. It is believed to possess about 200 nuclear warheads and has not signed the NPT.
An Israeli attack on an incipient Iraqi nuclear reactor near Baghdad in 1981 set back Saddam Hussein's ambitions to develop a nuclear weapon.
Iran praises Libya
Iran on Sunday hailed Libya's decision to scrap its weapons of mass destruction programme and called for pressure to be placed on Israel to do the same.
Libya agreed on Friday to disclose the country's WMD programmes and open the country to international inspectors to oversee their elimination.
"Iran believes that the whole world should move along the path of destroying such weapons," Foreign Ministry spokesman Hamid Reza Asefi told a news conference.
Asefi urged the international community to press harder on Israel to comply with international law on its alleged nuclear programme.
"It is the time for the world to push for Israel's disarmament as the main threat to the region," he said.
US President George Bush, who praised Libya for taking "essential steps" on the arms programmes, in a clear reference to Iran and North Korea's disputed nuclear programme, said: "I hope that other leaders will find an example in Libya's announcement".