Jack Straw was responding to a reports at the weekend suggesting that the Bush administration is stepping up plana for a possible attack.
The reports include one by investigative journalist Seymour Hersh published in the New Yorker magazine that one option being considered called for the use of nuclear "bunker-busting" bombs against Iranian targets.
The idea that Washington could launch a nuclear strike against Iran was "completely nuts", Straw said in an interview on BBC television.
The report by Hersh, said the US administration was seriously considering using tactical nuclear weapons against Iran to destroy its main centrifuge plant, which is believed to be heavily protected.
"They (the Americans) are very committed indeed to resolving this issue ... by negotiation and by diplomatic pressure. And what the Iranians have to do is recognise they have overplayed their hand at each stage," Straw insisted.
He said Britain, Washington's closest European ally, would not accept a pre-emptive strike against Iran, adding: "I am as certain as I can be sitting here that neither would the United States."
In the interview Straw said the international community was right to view the Islamic republic's nuclear programme with "high suspicion" but "there is no smoking gun, there is no 'casus belli' (justification for war)".
"They (the Americans) are very committed indeed to resolving this issue ... by negotiation and by diplomatic pressure"
British foreign secretary
Iran meanwhile has branded as "psychological warfare" media reports of plans for a US air strike.
Hamid Asefi, the foreign ministry spokesman, told reporters "we regard that (planning for air strikes) as psychological warfare stemming from America's anger and helplessness".
US publications such as the Washington Post reported over the weekend that the White House was studying options for military strikes against Iran's nuclear facilities.
Citing unnamed US officials and independent analysts, the Post said no attack appeared likely in the short term, but officials were preparing for it as a possible option and using the threat to convince Iranians of the seriousness of their intentions.
Pentagon and CIA planners have been exploring possible targets, such as Iran's underground uranium enrichment facility at Natanz and its uranium conversion plant at Isfahan, both located in central Iran, the report said.
Asefi also said it was a "big mistake" for the US and its allies to think the UN Security Council would be able to force Tehran to give up uranium enrichment, and insisted it was open to negotiations over its nuclear programme.
Reports say the US is planning
military options against Iran
The UN Security Council has demanded that Iran suspend all enrichment of uranium - a key process that can produce either fuel for a reactor or the material for a nuclear warhead - and gave Tehran until April 28 to comply before the International Atomic Energy Agency reports back to the council on its progress.
But Asefi told the press conference: "Research-scale enrichment is within our rights...we don't believe that the language of force will make Iran relinquish its legitimate rights. Nuclear research activities are continuing."
Last week, Manouchehr Mottaki, the foreign minister said Iran was prepared to negotiate over large-scale enrichment of uranium but would never abandon its right to enrich uranium.