An updated National Security Strategy released Thursday by the White House lists seven countries as prime examples of despotic systems, and singles out Iran for its hostility and its nuclear weapons pursuit.

In the strategy, President Bush says the national security policy is "idealistic" about some goals and how to reach them and "realistic" about others. The 49-page report reaffirms the policy of pre-emptive strike, an approach that was first introduced in 2002, when the National Security Strategy was last reflect the realities of a post Sept. 11, 2001, world.

National Security Adviser Stephen Hadley gave a speech on the strategy Thursday to the U.S. Institute for Peace.

"The president's strategy affirms that the doctrine of preemption remains sound and must remain an integral part of our national security strategy," Hadley said. "If necessary, the strategy states, under longstanding principles of self defense, we do not rule out the use of force before attacks occur, even if uncertainty remains as to the time and place of the enemy's attack."

Click here to read the report.

Pre-emption has gained some criticism since the war in Iraq began, when the administration argued that Iraq had weapons of mass destruction, but intelligence reports later proved to be faulty.

"If necessary, under long-standing principles of self defense, we do not rule out use of force before attacks occur, even if uncertainty remains as to the time and place of the enemy's attack," the report reads.

"We choose to deal with challenges now rather than leaving them for future generations. We fight our enemies abroad instead of waiting for them to arrive in our country," it says.

The strategy does not say the United States will use force in all cases of emerging threats, and that the preference is diplomacy. But it doesn't shy away from the need to have all options on the table.

"There are few greater threats than a terrorist attack with weapons of mass destruction. To forestall or prevent such hostile acts by our adversaries, the United States will, if necessary, act pre-emptively," the report reads.

The strategy acknowledges the bad intelligence about Iraq and says "there will always be" some uncertainty about hidden weapons programs, but Bush makes clear he will not take chances. The strategy also restates his intention to spread freedom and democracy, in a quote lifted directly from the president's 2005 inaugural address.

"It is the policy of the United States to seek and support democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in our world," the president said then and now.

The strategy lists seven countries that warrant special cause for concern — Iran, North Korea, Syria, Cuba, Burma, Belarus and Zimbabwe. It puts Iran and North Korea in a special category because of their nuclear programs, and vows to take "all necessary measures" to protect against them.

It adds a particular warning on Iran, which it says supports terrorists, threatens Israel and disrupts democratic reform in Iraq. It also issues a dire warning.

"We may face no greater challenge from a single country than from Iran. ... This diplomatic effort must succeed if confrontation is to be avoided," it says.

Speaking to an audience in Australia on Thursday, Secretary of State Condoleezza Rice outlined Iran's defiance.

"It is seeking to have a nuclear program that would allow it to develop a nuclear weapon and it's doing that, we believe, under cover of the [Nuclear Nonproliferation Treaty] and it's lied about its activities, and therefore, is in contradiction to its requirements or to its obligations under the NPT," Rice said.

"It also, of course, is involved as a central banker of terrorism and so Iran is to be — we have many reasons to be concerned about Iran. It also, by the way, has an unelected few who repress the desires of its population. So it is a troublesome state," she added.

Bush did not say in the strategy what would happen if international negotiations with Iran failed. The Bush administration currently is working to persuade Russia and China to support a proposed U.N. Security Council resolution demanding that Iran end its uranium enrichment program.

Cautioning against trying to predict any outcomes, Rice expressed optimism for the U.N. Security Council effort.

"The Security Council has now taken up the issue. I'm quite certain that the Security Council will find an appropriate vehicle for expressing again to the Iranians the desire and indeed the demand of the international community that Iran return to negotiations," Rice said.

Coinciding with the report's release, a top Iranian official said Thursday that his country was ready to open direct talks with the United States over Iraq, marking a major shift in Tehran's foreign policy a day after an Iraqi leader called for such talks. Ali Larijani, Iran's top nuclear negotiator and secretary of the country's Supreme National Security Council, told reporters that any talks between the United States and Iran would deal only with Iraqi issues.

White House spokesman Scott McClellan said the United States is prepared to talk with Iran about Iraq, but said any discussions must be restricted to that topic and not include other contentious subjects like Tehran's suspected nuclear weapons program.

Zalmay Khalilzad, the U.S. ambassador to Iraq, is authorized to talk with Iran about Iraq, much as the United States has talked with Iran about issues relating to Afghanistan, McClellan said.

"But this is a very narrow mandate dealing specifically with issues relating to Iraq," McClellan said. U.S. concerns about Iran's nuclear program are being dealt with at the United Nations. "That's a separate issue from this," McClellan said.

"We are, I think, beginning to get indications that the Iranians are finally beginning to listen, and there is beginning to be a debate within the leadership — and I would hope a debate between the leadership and their people — about whether the course they're on is the right course for the good of their country," Hadley said. "That has only come about because they have heard a coordinated message from the international community. It has been difficult to hold together."

Asked what he thinks of the administration approach to Iran, RepublicanSen. Gordon Smith of Oregon praised the president's efforts to take things one step at a time.

"I think the president makes very clear that diplomacy is the first option and we're playing out every opportunity for diplomacy with our European partners ... though he has made very clear that we're taking nothing off the table," Smith said.

Sen. John McCain, speaking at an event with Irish Prime Minister Bernie Ahern, said pre-emption is a consideration, but the last one to use.

"You have to exhaust every other option. I've said for sometime, this present specific threat of Iran acquiring nuclear weapons is the single greatest threat we face, outside the overall War on Terror," McCain, R-Ariz., said, adding that the world is in a "very, very critical period" of its history.

In the strategy, Bush had similar words for North Korea as he did for Iran. He said Pyongyang poses a serious nuclear proliferation challenge, counterfeits U.S. currency, traffics in narcotics, threatens its neighbors and starves its people.

"The North Korean regime needs to change these polices, open up its political system and afford freedom to its people," Bush said. "In the interim, we will continue to take all necessary measures to protect our national and economic security against the adverse effects of their bad conduct."

Bush issued rebukes to Russia and China and called Syria a tyranny that harbors terrorists and sponsors terrorist activity.

On Russia, Bush said recent trends show a waning commitment to democratic freedoms and institutions. "Strengthening our relationship will depend on the policies, foreign and domestic, that Russia adopts," he said.

The United States also is nudging China down a road of reform and openness.

"China's leaders must realize, however, that they cannot stay on this peaceful path while holding on to old ways of thinking and acting that exacerbate concerns throughout the region and the world," Bush wrote.

Since the last report, some successes can be viewed. A freely-elected government is operating in Afghanistan. In Iraq, citizens voted in the nation's first free election, a constitution was passed by referendum and nearly 12 million Iraqis elected a permanent government.

"It's tough going in Iraq but politics is breaking out there. The Iraqi people want this to work," Smith said. 'While you don't see it on the news, there's a lot of good news in Iraq, not least of which is the empaneling of their Parliament."

Iraq's Parliament convened Thursday for a half hour, during which time the new assembly was sworn in but no agreement could be reached on an assembly speaker. Other problems continue in Iraq. Sectarian violence threatens the fragile government and the U.S. death toll has topped 2,300.

Rice said earlier this week that Iraq's political transition will take a couple of years. The Pentagon has also announced it was moving about 700 additional U.S. troops into Iraq from Kuwait because of the escalating killings there and fears that a Shiite holiday would spark even more violence.

"When the Iraqi government, supported by the coalition, defeats the terrorists, terrorism will be dealt a critical blow," Bush said, acknowledging that the fight against terrorism was far from over.

The president said his administration is advancing his goal of spreading democracy by holding high-level meetings at the White House with democratic reformers in repressive nations; using foreign aid to support fair elections, women's rights and religious freedom; and pushing to abolish human trafficking.

Countering suggestions that he favors a go-it-alone approach to foreign policy, Bush emphasized multilateral problem-solving.

"Many of the problems we face — from the threat of pandemic disease to proliferation of weapons of mass destruction, to terrorism, to human trafficking, to natural disasters — reach across borders," he said.

"Effective multinational efforts are essential to solve these problems. Yet history has shown that only when we do our part will others do theirs. America must continue to lead."

FOX News' Wendell Goler, Megyn Kendall and The Associated Press contributed to this report.