The Palestinian action is required as part of a US-backed renewal of peace talks with Israel this month.
Dichter cautioned that a refusal to recognise Iran's intentions to build weapons of mass destruction could lead to a regional war.
He compared the possibility of such fighting to a surprise attack on Israel in 1973 by its Arab neighbours, known in Israel as Yom Kippur since the war started on the Jewish holy day.
"The American misconception concerning Iran's nuclear weapons is liable to lead to a regional Yom Kippur where Israel will be among the countries that are threatened," Dichter said in Tel Aviv on Saturday.
"Something went wrong in the American blueprint for analysing the severity of the Iranian nuclear threat"
Israeli public security minister
"Something went wrong in the American blueprint for analysing the severity of the Iranian nuclear threat."
Ehud Olmert, Israel's prime minister, had refuted the US intelligence report that came earlier this month, saying that Iran continues its activities to attain components necessary to produce nuclear weapons.
Tehran still poses a major threat to the West and the world must stop it, Olmert said.
Israel has for years been warning that Iran is working on nuclear weapons and has backed the US in its international efforts to exert pressure on Iran to stop the programme.
Israel considers Iran a significant threat because of its nuclear ambitions, its long-range missile programme and repeated calls by Mahmoud Ahmadinejad, the Iranian president, to wipe Israel off the map.
Iran says its nuclear programme is for peaceful purposes.
Israel will work to change the American intelligence agencies' view of Iran, said Dichter, a former chief of Israel's Shin Bet secret service agency.
"A misconception by the world's leading superpower is not just an internal American occurrence," Dichter said.