Biden also said that Washington is prepared to work towards improved relations with Russia, suggesting that Moscow could be consulted over a US missile defence system planned for eastern Europe.
"The last few years have seen a dangerous drift in relations between Russia and the members [of Nato]. It is time, to paraphrase president Obama, to press the reset button and to revisit the many areas where we can and should work together.
"We will continue to develop missile defence to counter a growing Iranian [ballistic missile] capability, provided the technology is proven and it is cost effective. We will do so in consultation with you, our Nato allies, and with Russia," he said.
Biden was speaking to the security conference during his first visit to Europe as US vice-president.
Washington says that its planned missile shield is meant to counter Iran's growing ballistic missile capability, but it has angered Russia, which sees it as a threat.
Al Jazeera's Mark Seddon, reporting from Munich, said that the Obama administration appears to be reworking a host of policies first mooted by the previous administration of George Bush.
"It is almost as if the Obama administration has decided not to do what the Bush administration did, which is rip everything up and start all over again, but to start with what they believe works and establish a degree of continuity," he said.
"Having said all that, there have been some major changes, particularly over Iran."
Washington has long accused Iran of using its uranium enrichment programme towards the creation of a nuclear weapons. Tehran says its nuclear work is solely for generating electricity.
The Obama administration has now signalled that it is open to dialogue with Iran, marking a dramatic shift from the Bush era.
|Iran's nuclear work will have to stop if relations with the US are to improve, Biden said [AFP]
"The Iranian people are a great people. The Persian civilisation is a great civilisation," Biden said.
"But Iran has acted in ways that are not conducive to peace in the region or to the prosperity of its people; its illicit nuclear programme is but one of those manifestations.
"Our administration is reviewing policy toward Iran, but this much is clear: We will be willing to talk."
The Obama administration will also work towards a durable peace between Israel and the Palestinians, Biden said.
"It is long time past for us to secure a just two-state solution. We will work to achieve it, and to defeat the extremists who would perpetuate the conflict," he said.
"And, building on the positive elements of the Arab Peace initiative put forward by Saudi Arabia, we will work toward a broader regional peace between Israel and its Arab neighbours."
The Munich conference has often been the venue for US administrations to reveal their thinking on foreign policy doctrine.
Biden is set to meet Angela Merkel, Germany's chancellor; Donald Tusk, the Polish prime minister; Yulia Tymoshenko, his Ukrainian counterpart; and Nicolas Sarkozy, the French president.
On the sidelines of the conference, Biden will hold talks on Sunday with Sergei Ivanov, the Russian deputy prime minister.
Ivanov, for his part, has said that Moscow would not start new missile deployments if Washington reviewed plans for a missile defence system in central Europe.
He said Moscow is eager to hold talks on the shield with the Obama administration and is open to a joint assessment of threats with the US.
The softer tone towards Russia by the US government comes as Washington and Nato seek support from Moscow on its war against Taliban fighters in Afghanistan.
"Quite clearly, this new US administration believes that they need Russia on-side and involved in pretty major way in Afghanistan … in his speech, Biden referred to the Taliban as a 'common enemy' that must be defeated by Russia and the US," Hamish McDonald, Al Jazeera’s correspondent in the Afghan capital Kabul, said.
"We are seeing the map in this region being re-drawn very quickly – in the last 24 hours we heard Russia say that it will enable the US to use new supply routes into northern Afghanistan.
"We might see a stage in the next few months where the US and Nato will be reliant on Russia for the success of the war in Afghanistan."