The US believes Iran is secretly pursuing nuclear weapons

However, he stressed that the US was trying to resolve the issue of Iran's nuclear ambitions "diplomatically".

He was speaking after Iranian President Mahmoud Ahmadinejad gave a speech threatening to "cut off the hand of the aggressor" if Iran was attacked.

Iran insists its nuclear programme is peaceful, a claim the US rejects.

HAVE YOUR SAY Iran is the one making the threats, let's not loose focus or find excuses for them Mark Israel, London Send us your comments

"All options are on the table," Mr Bush said as he responded to a question at the White House about whether the US was considering military action.

Mr Bush called for "a united effort with countries who recognise the danger of Iran having a nuclear weapon," saying the US was working closely with the UK, France and Germany on the issue.

International pressure over Iran's disputed programme increased last week when Iran announced that it had successfully enriched uranium.

Mr Ahmadinejad insists Iran's military is ready for any attack

Unease about the stand-off has helped push oil prices to record highs. US crude oil hit a record high of $71.60 a barrel on Tuesday.

Concern has been further fuelled by assertions from Mr Ahmadinejad that Iran is conducting research on P2 centrifuges, which could quadruple its enrichment powers.

The five permanent members of the UN Security Council and Germany held a working dinner in Moscow on Tuesday to discuss the row. Russia's Interfax news agency quoted a source close to the talks as saying that "no breakthrough decisions were made".

'Preparing for the worst'

Earlier, at a parade to commemorate Army Day, Mr Ahmadinejad said he wanted peace and security in the region but added the army should be equipped with the latest technology to deter any aggression.

NUCLEAR FUEL CYCLE Mined uranium ore is purified and reconstituted into solid form known as yellowcake Yellowcake is chemically processed and converted into a gas by heating it to above 64C (147F) Gas is fed through centrifuges, where its isotopes separate and process is repeated until uranium is enriched Low-level enriched uranium is used for nuclear fuel Highly enriched uranium can be used in nuclear weapons In depth: Nuclear fuel cycle

"Iran has created a powerful army that can powerfully defend the political borders and the integrity of the Iranian nation and cut off the hand of any aggressor and place the sign of disgrace on their forehead," he told military officers.

The BBC's Frances Harrison in Tehran says the message of the parade and the increasingly frequent military manoeuvres is that Iran is preparing for the worst, while hoping the world will accept it as a nuclear power.

But the BBC's regional analyst Pam O'Toole says that despite Iran's claims of enrichment success and the flexing of its military muscles, many questions about its capabilities and intentions remain unanswered.

Some Western military experts say Iran's new weaponry may not be quite as sophisticated as Tehran suggests, our correspondent says.

Iran is known to be a tough bargainer, our correspondent adds. The challenge for the international community is how to differentiate between Iranian rhetoric and reality - and how to respond in a united manner.