US President George W Bush has dismissed as "wild speculation" a media report suggesting he is considering using nuclear weapons against Iran.
Mr Bush said he hoped to use diplomacy to prevent conflict
The New Yorker report said the US was stepping up planning for a possible air attack on Iranian nuclear facilities.
But Mr Bush insisted the US was focused on finding a diplomatic solution to the Iranian nuclear issue.
Earlier, Iranian President Mahmoud Ahmadinejad refused to back down on demands to freeze uranium enrichment.
A senior Iranian presidential aide said the report was a joke and that any such attack was highly unlikely.
Mr Ahmadinejad also promised "very good nuclear news in the coming days", without giving more details.
Mohamed ElBaradei, head of the UN's nuclear watchdog, the International Atomic Energy Authority, is due in Iran on Wednesday.
Mr Bush dismissed the report by veteran US journalist Seymour Hersh, in a speech at a branch of the Johns Hopkins University in Washington DC.
"The doctrine of prevention is to work together to prevent the Iranians from having a nuclear weapon," he said.
"I know here in Washington prevention means force. It doesn't mean force necessarily. In this case it means diplomacy.
"What you are reading is just wild speculation which happens quite frequently here in the nation's capital."
In the New Yorker magazine report, Mr Hersh said the US had stepped up plans for a possible air attack and had increased clandestine activities inside Iran.
The White House has not specifically ruled out a military strike on Iran, instead repeating US opposition to any Iranian move to acquire nuclear weapons.
Western powers fear Iran is developing a nuclear bomb
"We do not want the Iranians to have a nuclear weapon, the capacity to make a nuclear weapon, or the knowledge about how to make a nuclear weapon. That's our stated goal," Mr Bush said on Monday.
"I got out a little early on the issue by saying 'axis of evil'. But I meant it."
The BBC's Justin Webb, in Washington, says the White House position is no more bellicose than it has been in the recent past.
But there seems to be little doubt that the Pentagon is being asked to come up with military options, even if those options are not, at the moment, being considered for use, he adds.
A string of senior Iranian officials poured scorn on Mr Hersh's report throughout Monday.
Iran's top nuclear negotiator, Ali Larijani, said the report was part of a White House-orchestrated psychological warfare campaign against Iran's nuclear programme.
He said if Washington was serious about such plans they would keep them secret.
Iranian army chief of staff General Abdolrahim Mousavi vowed that Iran would strike back if attacked.
"We will certainly retaliate against any action by the enemy, and we are vigilant over any military aggression," he told the Isna news agency.
Senior presidential aide Hamid Reza Taraqi said a tactical nuclear strike was highly unlikely and he rejected claims US combat troops might already be inside Iran making contact with ethnic minority groups.
Mr Taraqi said it was clear the Americans had no idea what was going on inside Iran.
But BBC Iranian affairs analyst, Sadeq Saba, says despite the official Iranian reactions, such reports will cause some concern among ordinary Iranians.
Last month, the UN Security Council gave Iran 30 days to halt its nuclear research, or run the risk of action such as sanctions.
Western powers fear Iran is developing a nuclear bomb. Iran says its nuclear programme is for civilian use.