WASHINGTON, Jan 18: President George Bush announced a day before his second inauguration that he would not rule out military action against Iran, giving new credence to a media report that America was actively planning air strikes on Tehran's nuclear sites.

Mr Bush's announcement, made during an interview to NBC News, followed a Pentagon denial on Monday of a New Yorker magazine report that America has already sent reconnaissance missions inside Iran to identify potential nuclear and other targets.

Speaking hours after the Pentagon denial, Mr Bush said America can take military action against Iran if that country was not forthcoming about its suspected nuclear weapons programme.

"I hope we can solve it diplomatically, but I will never take any option off the table," said Mr Bush when asked if he would rule out the potential for military action against Iran.

The military action, he said, can happen "if Iran continues to stonewall the international community about the existence of its nuclear weapons programme." Iran denies it has been trying to make nuclear weapons and says its nuclear programme is geared solely to producing electricity.

Political observers in Washington, however, pointed out that even Pentagon's denial of the New Yorker story does not rule out the possibility of a military action against Iran. All it says is that there were many mistakes in the story by an award-winning American journalist Seymour Hersh, the observers said.

And a Defence Department spokesman, Lt-Col Barry Venable, said: "We don't discuss missions, capabilities or activities of Special Operations forces," when asked whether the US military had been conducting reconnaissance missions in Iran.

The Pentagon's denial, although very critical of Mr Hersh's reporting, does not address the question of a military action against Tehran. Pentagon's chief spokesman Lawrence DiRita said: "The Iranian regime's apparent nuclear ambitions and its demonstrated support for terrorist organizations is a global challenge that deserves much more serious treatment than Seymour Hersh provides in the New Yorker article titled "The Coming Wars."

Mr Hersh's article, published on Sunday, was "so riddled with errors of fundamental fact that the credibility of his entire piece is destroyed," Mr DiRita said.

Mr Hersh reported President Bush had signed a series of top-secret findings and executive orders authorizing secret commando groups and other Special Forces military units to conduct covert operations against suspected terrorist targets in as many as 10 nations in the Middle East and South Asia. Iran and Syria are top on the list.

Mr DiRita did not comment on that assertion but he said Mr Hersh's sources fed him "rumor, innuendo, and assertions about meetings that never happened, programmes that do not exist and statements by officials that were never made."

Meanwhile, Pakistan also has strongly denied Mr Hersh's insinuation that Islamabad was helping US Special Forces in targeting suspected weapons sites in Iran. "There is no such collaboration," said Foreign Office spokesman Masood Khan.

"We do not have much information about Iran's nuclear programme, so I think this report is far-fetched and it exaggerates facts which do not exist in the first place," the spokesman told a press briefing. "I do not think there is any substance in what has been reported. I think this is pure conjecture," he said.