President-elect Barack Obama will offer Israel a strategic pact designed to fend off any nuclear attack on the Jewish state by Iran, an Israeli newspaper reported on Thursday.

Haaretz, quoting an unnamed source, said the Obama administration would pledge under the proposed "nuclear umbrella" to respond to any Iranian strike on Israel with a "devastating U.S. nuclear response."

Granting Israel a nuclear guarantee would essentially suggest the U.S. is willing to come to terms with a nuclear Iran, the paper reported.

According to the paper's source, Obama's nuclear guarantee would be backed by a new and improved Israeli anti-ballistic missile system. The Bush administration took the first step by deploying an early-warning radar system, which enhances the ability to detect Iranian ballistic missiles.

No immediate comment from Israeli officials or the U.S. embassy in Tel Aviv was offered.

Iran denies its nuclear program has military designs. But tough anti-Israel rhetoric from Tehran has spread fears that the Israelis, who are believed to have the Middle East's only atomic arsenal, could attack their arch-foe pre-emptively.

The source, according to Haaretz, noted that the discussion of the possibility of a nuclear Iran undermines efforts to prevent Tehran from acquiring such arms.

A senior Bush administration source reportedly said the nuclear umbrella was ridiculous and lacked credibility.

"Who will convince the citizen in Kansas that the U.S. needs to get mixed up in a nuclear war because Haifa was bombed? And what is the point of an American response, after Israel's cities are destroyed in an Iranian nuclear strike?," he said.