"We know that they are concerned about the impact of the sanctions. The sanctions are biting more deeply than they anticipated and we are working very hard at this," Robert Gates, US defence secretary, said on Monday.

"So I would disagree that only a credible military threat can get Iran to take the actions it needs to end its nuclear weapons programme," he said during a visit to Australia for security talks.

"We are prepared to do what is necessary but at this point we continue to believe that the political-economic approach that we taking is in fact having an impact in Iran."

Binyamin Netanyahu, the Israeli prime minister, told US Vice President Joe Biden on Sunday that only a "credible" military threat can deter Iran from building a nuclear weapon, Israeli political sources said.

Netanyahu, beginning a five-day US visit, argued that economic sanctions have failed to persuade Iran to stop its nuclear programme.

Peaceful resolution

However, Biden said after the talks that the sanctions "have a bite" and were having a "measurable impact", though he expressed frustration that Tehran had brushed aside overtures by President Barack Obama's administration.

"The only way to ensure that Iran will not go nuclear is to create a credible threat of military action against it if it doesn't cease its race for a nuclear weapon," one of the sources quoted Netanyahu as telling Biden.

In remarks to the Jewish Federations of North America General Assembly in New Orleans, Biden said: "We continue to seek a peaceful resolution and hope Iranian leaders will reconsider their current destructive and debilitating course".

"But let me be very clear about this: We are also absolutely committed to prevent Iran from acquiring nuclear weapons."

The West believes that Iran aims to use its uranium enrichment programme to build atomic weapons, and both Israel and the United States have said all options are on the table in dealing with its nuclear ambitions.

But Netanyahu, who has in the past called for "crippling sanctions" against Iran, had made clear that Israel wanted to see if tough economic sanctions could eliminate what it described as a threat against its existence.

Tehran has repeatedly denied it is seeking to build atomic weapons and maintains that it has a right to produce its own fuel for several nuclear power plants it's building for civilian use.

Biden's discussions with Netanyahu comes on the heels of US mid-term elections that left Obama in a weakened position with Republicans in control of the House of Representatives and the Democrats clinging to a slender majority in the Senate.

US politicking

Republican Senator Lindsey Graham set a tough tone on Saturday at a security conference in Ottawa when he said conservatives want "bold" action on Iran.

If Obama "decides to be tough with Iran beyond sanctions, I think he is going to feel a lot of Republican support for the idea that we cannot let Iran develop a nuclear weapon," Graham told the Halifax International Security Forum.

"Sanctions are important. They are increasing pressure on Iran. But so far there has not been any change in the behaviour of Iran and upgrading of international pressure is necessary," Mark Regev, Netanyahu's spokesman, quoted him as telling Biden.

The impasse over Iran's nuclear activities has already led to fresh UN and EU sanctions against Tehran, which were followed by several other unilateral punitive measures by the United States and the European Union.

Sanctions notably ban investments in oil, gas and petrochemicals while also targeting banks, insurance, financial transactions and shipping - which Tehran has brushed off as having no impact.

But Iran has said it is prepared to resume talks from November 10 and proposed that they be held in Turkey rather than Vienna, the site proposed by Catherine Ashton, EU foreign policy chief.

The talks, which include Britain, China, France, Russia, Germany and the US, have been deadlocked since October 2009 when the two sides met in Geneva.

The New York Times reported last month that the Obama administration and its European allies were preparing a new, more onerous offer for Iran than the one rejected by supreme leader Ayatollah Ali Khamenei last year.

The offer would require Iran to send more than 1,995 kgs of low-enriched uranium out of the country, an increase of more than two-thirds from the amount required under a deal struck in Vienna.