Israel (searchhas hinted at possible military action to stop what it calls a nightmare scenario — nuclear weapons in the hands of Iran (search) — but for now is waiting for U.S. diplomatic pressure and closer international scrutiny to do the job.

On Monday, the International Atomic Energy Agency (search), which is investigating suspicions of a secret Iranian nuclear weapons program, demanded full disclosure from Tehran, including acceptance of snap inspections.

Iran insists its nuclear programs are only for generating electricity as oil supplies dwindle. It also has said its equipment was "contaminated" with enriched uranium by a previous owner.

But Israel estimates Iran is just two to three years from having nuclear weapons.

An Israeli government official said Iran does not yet have the right amount of enriched uranium, as well as some other chemicals, needed to build a nuclear bomb, but it has the "know-how" and the ability to develop the materials. The official spoke on condition of anonymity.

The delivery method — the long-range Shahab-3 missile — was successfully tested in July, and experts said Iran is to begin serial production within two years.

If diplomacy fails, Israel, which is about 600 miles to the west of Iran, has made clear a military operation is feasible.

Israeli security officials said Iran's nuclear program is a focus of the army's five-year strategic plan, and Sharon has ordered the Mossad spy service to keep a close eye on the developments in Tehran.

"Any Iranian regime knows of course that Israel has the capability, the wherewithal, to deal with a military threat," said Zalman Shoval, an aide to Israeli Prime Minister Ariel Sharon. "Hopefully, a military threat can be avoided, nipped in the bud ... before it begins and this is where the United States comes in."

Israel has never confirmed being a nuclear power, but it is widely believed to have nuclear weapons.

In 1981, a fleet of Israeli warplanes flew some 460 miles over Middle Eastern deserts and mountains to Baghdad — sticking close to the ground throughout the flight to avoid being picked up by radars.

The warplanes let loose a string of bombs, knocking out Baghdad's nuclear reactors and halting Saddam Hussein's progress in obtaining nuclear weapons.

At the time, the operation was internationally condemned, even by Israel's staunchest ally, the United States.

However, the Sept. 11, 2001, terror attacks on the United States have changed the rules.

U.S. troops have overthrown regimes in Afghanistan and Iraq, both on Iran's borders, in less than two years. Tehran is aware that as a member of President Bush's "axis of evil" it could be next in line.

"Iran must cooperate fully. Iran has pledged not to develop nuclear weapons and the entire international community must hold that regime to its commitments," Bush recently said.

Iran apparently believes the attack could come from the United States or Israel and announced it was increasing its defense spending this year.

Iranian Foreign Ministry spokesman Hamid Reza Asefi recently warned Israel against embarking on an "adventure" similar to the 1981 strike, saying "it will pay dearly" if it does so.

The United States and Israel would most likely choose to carry out pinpoint strikes on Iranian nuclear facilities, rather than a large-scale assault if forced to take military measures, said Ephraim Kam, a researcher with Tel Aviv University's Jaffee Center for Strategic Studies. Kam released a study last week on Iran's nuclear capabilities.

"A combination of nuclear capabilities and long-range missile capabilities...combined with their position that Israel should not exist is a real threat," Kam said.

Suspicions about Iran's nuclear activities prompted IAEA chief Mohamed ElBaradei in February to tour Iran's nuclear facilities, including the incomplete plant in Natanz, about 300 miles south of Tehran. Diplomats said he was taken aback by the advanced stage of a project using hundreds of centrifuges to enrich uranium.

Another, larger uranium enrichment facility, is to be completed within the next few years, Western intelligence agencies discovered with the help of Iranian opposition groups.

ElBaradei has said that Iran's nuclear program has been going on far longer than the agency had realized and that it's possible Tehran had bought nuclear components on the "black market."

"I would urge Iran in the coming weeks to show proactive and accelerated cooperation, and to demonstrate full transparency by providing the agency with a complete and accurate declaration of all its nuclear activities," he said Monday in Vienna, Austria.

The United States is pushing the IAEA to report to the U.N. Security Council that Iran is violating nuclear safeguard regulations, opening the door to economic sanctions. Tehran recently signaled that it is open to negotiating terms for snap U.N. inspections of its nuclear sites.