The United States has continued to accuse Iran of pursuing atomic weapons under cover of its civil nuclear programme, despite a consensus report from 16 US intelligence groups in December saying it was believed that Tehran halted its weapons project in 2003.
Iran, which denies the accusations, says that its nuclear programme is to generate electricity.
Israel is widely believed to have hundreds of nuclear warheads.
Olmert said international and political sanctions on Iran were "only an initial step".
In addition to measures agreed by the United Nations, he said, "sanctions should also be initiated by individual countries which have dealings with Iran."
Olmert is on what some Israeli political commentators have called his "farewell visit" to the United States.
During the speech Olmert pledged to pursue a "historic breakthrough" in Israeli-Palestinian peace talks by the end of the year.
However, he did not say whether he and Mahmoud Abbas, the Palestinian president, will meet Washington's target of a framework statehood deal before Bush leaves office in January.
Condoleezza Rice, the US secretary of state, says that Washington will keep pressing for an Israeli-Palestinian deal despite the corruption allegations facing Olmert.
Rice, addressing the Aipac meeting earlier, also called for greater international pressure on Iran to halt its suspected nuclear weapons programme.
Olmert, who arrived in Washington on Tuesday has rebuffed calls that he leave office over allegations that he took envelopes stuffed with cash from a Jewish-American businessman.
Both Olmert and the New York-based fundraiser have denied any wrongdoing.
Olmert has said he would resign if indicted.