And asked if the British military option was on the table, he admitted: "You can never say never in any of these situations."

The warning is a significant increase in the language the PM has used against the Tehran-based regime which is also accused of developing nuclear weapons. American military experts have already said war-planes are on standby to attack.

Mr Blair said he would prefer to resolve disputes with Iran through "peaceful and diplomatic means".

But he attacked the regime which has threatened to wipe Israel off the map.

He said: "The concern about Iran is growing very, very substantially - and the more the President of Iran carries on using this type of language and saying what he says about the state of Israel, the more people get worried."

The PM warned the Tehran government would be making a "very serious mistake" if it defied international calls to stop making nuclear weapons, adding: "When they try to export terrorism, it's a problem. When they are trying to meddle in Iraq, it's a problem."

TONY BLAIR YESTERDAY

Blair went on: "There is a virus of extremism which comes out of the cocktail of religious fanaticism and political repression in the Middle East which is now being exported to the rest of the world.

"We will only secure our future if we are dealing with every single aspect of that problem. Our future security depends on sorting out the stability of that region."

The warning comes as an Iranian newspaper announced a contest for cartoons satirising the Holocaust in response to the caricatures of the prophet Mohammed which appeared in Denmark.

Iran said it was cutting trade ties with the Danes - but the EU warned that attempts to boycott Danish goods or stop trading with European countries would lead to further deterioration in relations.

During his session in front of senior MPs on the Commons Liaison Committee, Mr Blair also pledged a police crackdown on Islamic fanatics who brandished hate-filled placards in the UK last week.

DEFENCE Secretary John Reid last night said there could be "significantly fewer British forces" in Iraq within a year - but only if threats from insurgents are reduced and the country has effective local government systems.

President Bush has been warning about Tehran's nuclear program, which also worries many other countries.

The UN Security Council is taking it up, which prompted Tehran to order UN surveillance gear and seals be removed.

The poll found two-thirds or more of Americans think if Iran develops nuclear weapons, it's likely to attack Israel, Europe, or the U.S.

There's even greater concern Iran would pass nuclear weapons to terrorists.

“The public is clearer in its view of the potential threat posed by Iran than in what to do about it,” the Pew Center said.

“More Americans worry that we will wait too long than act too quickly in dealing with Iran's nuclear problem. However, far more Americans say the United Nations or the European Union rather than the U.S. should take the lead in dealing with the crisis.”

The two German men have been accused of "having sold a vibration testing facility in 2001 and 2002 on behalf of a foreign military intelligence procurement entity," the prosecutor's office said in a statement posted on its Web site.

A German official familiar with the case, speaking on condition of anonymity due to the sensitivity of the investigation, said the country involved was Iran.

"These missile technology dealers ... appear to have been acting alone and were not part of any organized gang," he said.

The state prosecutor's office in Karlsruhe, Germany did not name the men or the German company they worked for.

The involvement of German citizens in what U.S. and European officials believe is Iran's covert nuclear weapons program will be embarrassing for Chancellor Angela Merkel, who has vowed to prevent Tehran from getting nuclear weapons.

"You really can't separate Iran's nuclear activities from its missile program. The missiles are the delivery system," an EU diplomat familiar with the case said.

Iranian President Mahmoud Ahmadinejad has called for
Israel to be "wiped off the map" and publicly doubted that six million Jews were killed by the Nazis during World War Two.

Recent U.S. intelligence recovered from a stolen laptop computer suggests that Iranian missile experts are trying to develop a missile re-entry vehicle capable of carrying a relatively small nuclear warhead, EU and U.S. officials say.

Last week the governing board of the
International Atomic Energy Agency (IAEA), the U.N. nuclear watchdog, voted to report Iran to the
U.N. Security Council, which has the power to impose sanctions, due to fears it is developing atomic weapons.

Iran says it does not want weapons, only nuclear energy.

NORTH KOREAN MISSILES

With the exception of Russia, China and North Korea, few countries sell Iran weapons or dual-use technology that could be used to make atomic, chemical or biological weapons.

To the annoyance of the United States and
European Union, Russia has made it clear that it is willing to sell small-scale defensive missiles to Iran. Late last year, Moscow agreed to sell Iran tactical surface-to-air missiles that could be used to shoot down low-flying aircraft or guided missiles.

However, even Russia says it will not sell medium- and long-range missile technology to the Islamic republic.

But a European and a non-European intelligence official told Reuters that Russian middlemen were helping Iran get missile technology from North Korea that could bring central Europe within the range of Iranian missiles.

An EU diplomat, citing his country's intelligence, said Iran had purchased 18 disassembled BM-25 mobile missiles with a range of around 2,500 km from North Korea. He was confirming a German newspaper report from December that cited Germany's BND foreign intelligence service.

One of the intelligence officials said a former Russian military officer with the first name Viktor had helped Iran get Soviet-made SSN6 missile technology from Russia and North Korea, which Iran could use to improve the accuracy of its newly-bought BM-25s and increase their range to as much as 3,500 km.

"The Russian authorities either don't know about him or don't care," the official said, adding that there was no evidence that Moscow approved of Viktor's activities.

Iranian and Russian officials declined to comment.

Iran's Shahab-3 missiles have a range of some 2,000 km. With a range of 3,500 km, the missiles could reach central Europe.

In December, the United States imposed sanctions on six Chinese, two Indian and one Austrian firm for selling missile or chemical weapons-related supplies to Iran.

Officials from the Vienna-based watchdog International Atomic Energy Agency refused to comment but an IAEA report on January 31 said the UN watchdog had presented Iran with "information that had been made available to the agency" and which concerned work related to high explosives.

Iran has dismissed this information as "related to baseless allegations," according to the report which did not provide details about the high explosives data.

The report said the IAEA was also looking into "alleged undeclared studies" to build a secret plant for converting uranium, a step in making nuclear reactor fuel that can also be bomb material, and "the design of a missile re-entry vehicle, all of which could have a military nuclear dimension."

A Western diplomat said the design for the underground shaft, with sensors in it to be connected "to a control center 10 kilometres (six miles) away" was "clearly designed for some underground testing," and that this could be nuclear although the design did not indicate that this was for atomic weapons testing.

The diplomat said the IAEA had asked the United States for permission to show the classified document to the Iranians.

The information was part of extensive Farsi-language computer files and reports which the United States has obtained and feels is the best sign yet that Iran seeks to make nuclear weapons.

The IAEA was first briefed on this last July.

US officials are confident the data is genuine, diplomats said, even though some analysts have criticized it as unreliable since it is believed to come from only one source.

The data concerns a program called Project 111 under which the Iranians have also studied how to design a ballistic missile to handle a load that is not named as a possible nuclear warhead. The word "nuclear" is not mentioned in any of the Project 111 documents.

But the "package" could only be for this purpose due to the height at which the missile is set to explode on re-entry, diplomats said.

"The shaft design was part of Project 111," the Western diplomat said.

The IAEA has been investigating Iran for three years after US allegations that it is carrying out secret atomic weapons development under the guise of a nuclear program which Tehran says is a peaceful effort to generate electricity.

The IAEA's 35-nation board of governors voted last week to report Iran to the UN Security Council over unresolved issues in a move that opens the door to punitive action.

The IAEA report of January 31 also said that Iran had handed over a document on how to make uranium hemispheres whose only use would be in making nuclear weapons.

Iran claims not to have used the information for weapons work as it says it was given the document without asking for it by an international nuclear smuggling network which offered it technology and parts in 1987.

The IAEA has also "shared with Iran" new information it has that Iran may have taken deliveries of sophisticated P-2 centrifuges, machines that enrich uranium, despite Tehran saying it has only received P-2 designs.

The Washington Post newspaper Wednesday reported on the alleged underground shaft designs.

According to the New York Daily News, the FBI told British officials well before the bombings that Khan "was trouble" and should be "checked out".

The information passed on by the FBI is said to have come from a Pakistani-born al-Qaeda supergrass, who is currently in protective custody having pleaded guilty to a range of terrorist charges in the US. The informant cannot be named in Britain because he is alleged to be connected to men about to stand trial in London charged with terrorist offences.

Some critics have suggested the British authorities' prior knowledge of Khan shows that the July attacks, which killed 52 people as well as the four bombers, were the result of an intelligence failure.

Chuck Schumer, a US senator, likened the situation to the events before the 11 September, 2001 attacks on American cities by men who were known to the CIA. "This is the British version of pre-9/11, where a country receives a generalised warning and ignores it with terrible consequences," he said.

British security sources say the reality is that Khan was not "ignored". They say that MI5 has already told ministers that officers did, indeed, monitor Khan in 2004, as he was an associate of one of the men about to stand trial in London. At that time, MI5 officers judged the considerable costs of the surveillance operation were not justified by a man whose criminal activities were believed to be limited to shoplifting.

While the US report largely supports previously-known facts about British intelligence before the July attacks, it could also provide clues about how the investigation into those attacks is proceeding.

If proven, a connection between Khan and the US-based informant would be more evidence of the international dimension of the July plot, and the much-theorised role of the al-Qaeda network. MI5's continuing investigation into the July attacks is now firmly focused on Pakistan.

Last night a senior French intelligence chief claimed the UK failed to take action against radical Islamic cleric Abu Hamza for years, despite evidence that he was involved in terrorism.

Christophe Chaboud, director of France's national anti-terrorism co-ordination unit (UCLAT), said evidence implicating Hamza was passed on from French intelligence. He said Hamza sent dozens of people from Finsbury Park mosque to terror training camps in Afghanistan.

He said: "We thought it would have been necessary to take action, to arrest and prosecute him." A report in today's Guardian newspaper claimed France was so concerned that it ran undercover missions with the mosque as the target.

Copyright The Scotsman

The claim that the Saudis had passed information to London about a bomb plot was first revealed by the Observer in August 2005. At that time, British security sources categorically denied they had received any warnings that might have prevented the July bombings. According to the paper, British sources said “they did not recognise” the specific information in the Saudi claims.

In its latest article, the paper says that high-ranking counterterrorism agents working for the US National Security Council have now confirmed that such a warning was received by American and British officials in early 2005.

According to the Observer, the Saudi security advisor was “convinced” the intelligence transmitted to London was “directly linked” to the July bombings.

A statement issued in August 2005 by Prince Turki al-Faisal, Saudi ambassador to the UK, confirmed, “There was certainly close liaison between the Saudi Arabian intelligence authorities and the British intelligence authorities some months ago when information was passed to Britain about a heightened terrorist threat to London.”

The Saudi intelligence is said to be based on information obtained from intercepted mobile phone calls from Kareem al-Majati, named as one of Al Qaeda’s leaders in the region, to Mohammed Siddiqui Kahn, who headed the four-man terrorist cell that detonated the London bombs.

According to the Observer, a Saudi official said, “It was clear to us that there was a terror group planning an attack in the UK. We passed all this information on to both MI5 and MI6 at the time. We are now investigating whether these calls were directly to the London bombers. It is our conclusion that either these were linked, or that a completely different terror network is still at large in Britain.”

The revelations in the Observer cast a sharp light over the seemingly inexplicable decision to lower the terrorist threat level in the UK less than a month before the attacks. The terror threat remained lowered despite Britain hosting the G8 conference of the leaders of the world’s most powerful nations—including President George W. Bush—that necessitated a massive security operation.

In January 2006, the Sunday Times reported it had seen a leaked document from Britain’s Joint Terrorism Analysis Centre (JTAC) claiming the secret services still knew very little about the July 7 bombings and the failed July 21 attack.

“We do not know how, when and with whom the attack planning originated. And we still do not know what degree of external assistance either group had,” the 8-page report states.

Further on, the JTAC document says, “How long the 7/7 attack had been planned remains unknown.”

If Saudi intelligence did indeed pass on information to their British counterparts about a possible Al Qaeda plot to bomb the London Underground, why is there no reference to this in the JTAC report?

Last year, on July 7, the US-based Stratfor intelligence web site reported rumours within intelligence services that Israel’s Mossad had also warned MI5 of a possible terror attack.

Further, some of the bombers were known to the security services. One of them, Mohammed Sidique Khan, was scrutinised by MI5 in 2004 as part of an inquiry into an alleged plot to explode a truck bomb outside a London target.

The explanation that this simply reveals extraordinary intelligence failures becomes more and more unconvincing.

If Britain was informed of a threat, why was this ignored at the time? And why did the security services subsequently deny that the information had been sent by Saudi Arabia?

The Bush administration seized on 9/11 as a pretext for the invasion of Afghanistan and then Iraq, as well as an excuse to implement a raft of antidemocratic legislation. There is a substantial body of information pointing to the fact that those responsible for 9/11 were also known to the CIA and that a decision had been taken within the highest levels of the security services and the government to allow a terrorist atrocity to be committed to facilitate this agenda.

The London bombings were also seized upon by the Blair government in order to abrogate longstanding democratic rights and strengthen the powers of the police and secret services—including implementing a “shoot-to-kill” policy for alleged terror suspects that resulted in the police murder of the young Brazilian worker Jean Charles de Menezes.

It appears that on the issue of having prior knowledge of and possibly even collusion with the perpetration of a terrorist crime, London may once again have followed Washington’s lead.

Appeals for calm went largely unheeded as police shot dead four more protestors during rioting in Afghanistan, bringing the worldwide death toll to 13.

Eleven demonstrators have been killed since Friday in Afghanistan, and one each in Somalia and Lebanon.

A top Taliban commander offered a reward of 100 kilograms of gold to anyone who killed the person responsible for the "blasphemous" cartoons, the Afghan Islamic Press (AIP) reported.

The re-printing of the 12 offending caricatures of the Prophet Mohammed in a French satirical weekly on Wednesday, along with a fresh batch of similar cartoons, was seen as likely to deepen Muslim anger against what is perceived as an act of blasphemy.

As Washington grappled with anger among Muslims President George W. Bush condemned the violence but admonished the media to be more "thoughtful" of others.

However, Secretary of State Condoleezza Rice sharpened the political dimension of the controversy by charging Iran and Syria, two frequent targets of the Bush administration, with stoking sectarian feelings.

Emerging from talks with Israeli Foreign Minister Tzipi Livni, Rice said some Muslim countries were behaving responsibly but "there are governments that have also used this opportunity to incite violence."

"I don't have any doubt that ... Iran and Syria have gone out of their way to inflame sentiments and to use this to their own purposes. And the world ought to call them on it," she said.

Rice went further than previous US statements which accused Tehran and Damascus of not doing enough to rein in the violent protests over the satirical images of Mohammed first published in a Danish paper.

Observers say the United States has a difficult task in balancing a respect for press freedom with the needs of public diplomacy to reach out to the Muslim world enraged by caricatures of Islam's holiest figure.

US officials privately express frustration with the situation.

Russia's President Vladimir Putin in an interview with Spanish newspapers slammed the cartoons -- first published in Denmark and later reproduced in dozens of mainly European papers -- as a provocation, equating them with child pornography.

He called on Denmark to "ask for forgiveness."

In Vienna, the current president of the European Union, Austrian Chancellor Wolfgang Schuessel, denounced the "spiral of reciprocal provocations and insults" which, he said, fanned the flames of intolerance.

Neither "disparaging caricatures" of Mohammed nor "jokes about the Holocaust have any place in a world where cultures and religions should live side by side in a spirit of mutual respect," he said, alluding to an Iranian newspaper that has launched a contest for cartoons about the Nazi campaign to exterminate Jews.

The Danish newspaper Jyllands-Posten, which first published the offending cartoons last September, said it would not, after all, publish the Iranian counter-cartoons. It arts editor had previouly suggested it would.

European Union foreign policy chief Javier Solana will work to ease tensions during a trip to the Middle East next week, he said, warning that the dispute could seriously strain relations between the Muslim and non-Muslim worlds.

Three United Nations human rights experts, Doudou Diene, UN monitor on racism; Asma Jahangir, expert on freedom of religion; and Ambeyi Ligabo, the world body's watchdog on freedom of expression, slammed the publication of the caricatures, but said violence was the wrong way to protest.

A group of moderate Muslims in Denmark said Wednesday it plans to launch a campaign promoting the Scandinavian country in the Arab world in an attempt to soothe tensions.

The initiative came as the Danish government said it would exclude radical imams from its talks with Denmark's Muslim community on its integration into society.