Vice President Dick Cheney left open the possibility of U.S. military action against Iran over its nuclear ambitions, saying Saturday that "all options are still on the table."

Cheney, speaking at a joint news conference with Australia's Prime Minister John Howard, said that the United States was working with it allies to persuade Iran to give up its nuclear weapons programs, and that it was Washington's preference for that to happen peacefully.

"But all options are still on the table," Cheney told reporters, reiterating his administration's long-standing position on Iran.

The next step toward getting Iran to abandon its nuclear programs was still being debated, he said.

"It would be a serious mistake if a nation such as Iran became a nuclear power," Cheney said.

Cheney said Iran has sponsored terrorism in the Middle East, and he accused Iran's President Mahmoud Ahmadinejad of making inflammatory statements.

Cheney did not specify which of Ahmadinejad's remarks he was referring to.

The International Atomic Energy Agency reported Thursday that Iran had not only ignored a U.N. Security Council ultimatum to freeze the enrichment program, but had expanded that program by setting up hundreds of centrifuges.