Robert Gates, the US defence secretary, said Fallon had asked for permission to retire early because reports on the issue meant he felt he could no longer be effective.
Al Jazeera's Rob Reynolds looks at some signs that, while by no means conclusive, support the view that an attack on Iran may be imminent:
Iraq precedent. In aftermath of bungled Iraq occupation, senior US military figures who disagreed strongly with administration's strategy deliberated resigning in protest. Fallon may be quitting after losing an internal battle to prevent a conflict.
Dispatch of US warships to Lebanon's coast, including an Aegis guided missile destroyer which could provide cover for Israel if Iran responds to an attack by firing missiles at Israel.
Dick Cheney's trip this weekend to the Middle East. The vice-president, the leading hawk in the White House on Iran, will visit Saudi Arabia, whose support would be needed before any strike could be contemplated, and Oman, a US key military ally and logistics hub strategically situated to control the vital Strait of Hormuz.
Shimon Peres, the Israeli president, said this month Israel would not act alone to stop Iran from acquiring nuclear weapons, a change in language that could signal that the White House has told Israel it is prepared to act in concert with it militarily.
He dismissed as "ridiculous" speculation that the resignation signalled a step towards war.
Dana Perino, the White House press secretary, said also dismissed the idea that military action against Iran was any closer.
"There's no one in the administration that is suggesting anything other than a diplomatic approach to Iran." she said on Wednesday.
But she also reiterated a long-standing refusal by the US president - who last year warned that a nuclear-armed Iran could mean "World War Three" - to rule out military action.
Perino also denied Bush was intolerant of opinions opposed to his own.
"That is absolutely nonsense because President Bush has always fostered an environment of robust and healthy debate," she said.
While some consider it unlikely that Bush, as a "lame duck" president with only 10 months left to his term, would undertake such a major military action as an attack on Iran, there is precedent from Bush's own father.
In December 1992, after the former president had already lost his re-election battle to Bill Clinton, George Bush sent thousands of US troops to invade Somalia on a peacekeeping mission.
And just days before leaving office, the former president ordered a strike on Baghdad with 40 cruise missiles striking targets linked to Iraqi weapons development, an example of how the US president can order military action at any time.
|The US has moved warships to the Lebanon |
coast, including a missile destroyer [AFP]
Over the past year, Bush and Dick Cheney, the vice-president, have ratcheted up the rhetoric against Iran, which says its nuclear programme is for peaceful purposes.
Fallon said on Tuesday he did not disagree with the Bush administration over Iran, but that press reports had made it difficult to do his job effectively.
Fallon made a surprise visit to the Iraqi capital Baghdad on Wednesday after denying other reports he had clashed with General David Petraeus, the US commander in Iraq, over military strategy there.
Excerpts from Admiral William Fallon's interview to Al Jazeera in September 2007:
Al Jazeera: Is there a coming war on Iran?
Fallon: No, I certainly hope not. It is my belief that today, there is far too much talk of war and not enough talk about moving things forward in this region and taking care of the many needs of the people that I have seen through my visit here.
This constant drumbeat of conflict is one that strikes me as not helpful, not useful for the people, and I wish we could get moving to things that are more constructive for the region.
Al Jazeera: There are claims that you said "the war on Iran will not happen during my time". Does this mean that it will happen after you leave?
Fallon: Well, first of all I did not say that. But as I indicated to you in my first answer, it is certainly my hope and expectation that there is no war and that is what we ought to be working for. We ought to find ways in which we can get countries to sit together for the benefit of everyone involved. So whether now or in the future, war is not a good idea."
"Admiral Fallon is a true warrior who has served our country selflessly and honourably for more than 40 years," Petraeus said in statement read by Major-General Kevin Bergner in Baghdad.
But Bush's Democratic critics have seized on Fallon's departure as another sign that the Bush administration refuses to tolerate military officers who speak their minds.
Harry Reid, the US senate majority leader, called it "yet another example that independence and the frank, open airing of experts' views are not welcomed in this administration".
Hillary Clinton, the Democratic presidential candidate, described Fallon as a "voice of reason in an administration which has used inflammatory rhetoric against Iran", and urged the White House to pursue diplomacy with Tehran instead of conflict.
"Admiral Fallon's resignation should not be used as an excuse to ratchet up tensions with Iran," the New York senator said in a statement.
The Esquire article said Fallon's reported disagreements with Bush over his policy on Iran could lead to his dismissal in favour of someone "more pliable".
It also said that, were that to happen, it could be taken as a sign that Bush and Cheney intended to take military action against Iran "before the end of this year and don't want a commander standing in their way".
But Gates dismissed the magazine's claims as "ridiculous" and said Fallon had made the decision to retire of his own volition.
Fallon co-operated with the author during the article's preparation but strongly criticised the story after it was published, describing it as "poison pen stuff".
The article was the latest in a series of interviews that appear to have placed Fallon at odds with the Bush administration.
He told Al Jazeera in 2007 that the "constant drumbeat of conflict is one that strikes me as not helpful, not useful for the people, and I wish we could get moving to things that are more constructive for the region".