A just released IAEA report says Iran has worked on designing a bomb and that research to that end may be ongoing

Leon Panetta, the US defence secretary, has said that military action against Iran could lead to "unintended consequences" for the region.

His comments came only hours after Iran itself said that any attack on its nuclear sites would be met with "iron fists."

"You've got to be careful of unintended consequences here," Panetta said at the Pentagon on Thursday.

Panetta, who in July succeeded Robert Gates in the Pentagon's top post, said his assessment was in line with his predecessor's.

He maintained that a raid on Iran might fail to deter Iran "from what they want to do" and would only delay its controversial nuclear programme.

"But more importantly, it could have a serious impact in the region, and it could have a serious impact on US forces in the region," he said. "And I think all of those things, you know, need to be carefully considered."

'Toughest sanctions'

Panetta put emphasis instead on US efforts to win tougher sanctions against Tehran.

"It is important for us to make sure we apply the toughest sanctions -- economic, diplomatic pressures -- on Iran to change their behaviour," he said.

"And we are in discussions with our allies with regards to additional sanctions that ought to be placed on Iran."

The European Union may approve fresh sanctions against Iran within weeks, after a UN agency said Iran had worked to design nuclear bombs, EU diplomats said on Thursday.

EU sanctions would be a significant part of Western efforts to ratchet up pressure on Iran. Western governments would prefer UN Security Council measures against Iran, but Russia and China, both permanent UN Security Council members with veto power, are opposed.

Tensions over Iran's nuclear programme were reignited on Tuesday when a report by the International Atomic Energy Agency (IAEA) said Iran had worked on designing a bomb and that research to that end may be ongoing.

Israel exacerbated speculation of a raid against Iran after last week's testing of a ballistic missilecapable of travelling the 6,437km to Iran.

Israel's first test-fire of a missile in three years came after Israeli media speculation alleging Binyamin Netanyahu, the Israeli prime minister, and Ehud Barak, the defence minister, of planning a strike against Iran's nuclear facilities.

Iran has said that it will respond to any attacks by hitting Israel and US interests in the Gulf.

"Our enemies, particularly the Zionist regime [Israel], America and its allies, should know that any kind of threat and attack or even thinking about any [military] action will be firmly responded to," Ayatollah Ali Khamenei, Iran's supreme leader, said on state television.