The US Pentagon has set up a special panel to plan and co-ordinate a possible attack on Iran, according to a report in New Yorker magazine.
The report claims the Pentagon panel had been created to plan an attack on the Islamic state that could be enacted within 24 hours of President George W. Bush's command.
But a Pentagon spokesman today denied the US was planning an attack on Iran and said he knew said he knew of no such group.
Washington has recently sent a second aircraft carrier to the Gulf with supporting warships, seen as a warning to Iran.
British Prime Minister Tony Blair's spokesman dismissed the article, saying Mr Blair had spoken for Washington too when he recently denied there were plans for military action.
British foreign secretary Margaret Beckett said Iran was treading a "dangerous route" but the West still wanted to negotiate.
"The steps that we have taken are reversible. There is nothing that we would like better than to be able to reverse them and no longer to have to continue with sanctions," she told a news conference in Islamabad.
UN sanctions were first slapped on Iran in December, barring the transfer of technology and know-how to the country's nuclear and missile programme.
That resolution said further measures could follow if Iran refused to halt enrichment by February 21st.
British government sources said support for business with Iran - some $20 billion worth of export credits provided by European agencies - would now be looked at closely, as would arms exports.