"I don't think that a military intervention against Iran's nuclear installations should be necessary in the short term," Halutz told army radio on Tuesday.
"There is no threat to the existence of the state of Israel as long as Iran does not possess nuclear arms."
Israeli politicians and military commanders have recently stepped up warnings about Iran, which Israel and the United States accuse of trying to develop a nuclear arsenal.
Iran denies the charge, saying its nuclear programme is merely designed to meet energy needs.
Israeli fears were heightened when Mahmoud Ahmadinejad, the Iranian President, in October called for the Jewish state to be "wiped off the map."
Meir Dagan, the head of the Mossad overseas intelligence agency, had told MPs earlier this week that Iran would be able to build an atom bomb within two years.
Ahmadinejad has called for
Israel to be wiped off the map
Halutz, however, said he did not believe Iran would actually complete manufacturing a bomb "before the start of the next decade."
He said that the regime in Tehran had "decided to obtain these (nuclear) weapons".
"If they manage to do so, we will not be the only ones targeted and we should work out how to defend ourselves," he added.
Benjamin Netanyahu, former prime minister and recently elected leader of the right-wing Likud party, had said earlier this month that Israel needed to "act in the spirit" of, Menachem Begin, the late premier who ordered an air strike on Iraq's French-built Osirak nuclear reactor in 1981.
Israel - nuclear power?
Israel itself is believed to be the only nuclear power in the Middle East, although it has never admitted to having a non-conventional arsenal.
Israel's Dimona nuclear plant in
the Negev desert
Secrecy surrounding its nuclear capaiblity were lifted when a former worker at Israel's Dimona plant, Mordechai Vanunu, gave a British newspaper descriptions and photographs of Israeli nuclear warheads in the 1980s.
Arab states have accused the United Nations nuclear watchdog of holding back from criticising Israel.
Egypt, Syria and Saudi Arabia said the the International Atomic Energy Agency (IAEA) was ignoring Israel's alleged weapons of mass destruction, according to a BBC report.
At the same time, they said, the agency was putting pressure on other countries to give up their nuclear programmes.