With Iran racing forward with its nuclear program, Israel now believes the Islamic Republic will master centrifuge technology and be able to begin enriching uranium on a military scale this year, The Jerusalem Post has learned.

The new assessment moves up Israel's forecasts on Teheran's nuclear program by almost a full year - from 2009 to the end of 2008. According to the new timeline, Iran could have a nuclear weapon by the middle of next year.

Iran, a senior defense official said on Tuesday, had encountered numerous technical obstacles on its way to enriching uranium but was now on track to master the technology needed to enrich uranium within six months.

Israel is also concerned that Teheran is developing a cruise missile that can evade interception by the Arrow, the IDF's anti-ballistic missile defense system. Iran is suspected of having smuggled Ukrainian X-55 cruise missiles and using them as models for an independent, domestic project. A cruise missile, which flies at low altitudes to dodge radar detection and interception, could be used to carry a nuclear warhead.

Prime Minister Ehud Olmert said Tuesday that Israel had the ability to create the tools needed to ensure its continued existence. Hinting at Iran, Olmert said that nothing in the world could undermine or bring an end to Israel's existence.

In a speech to a Keren Hayesod group, Olmert said, "I am asking that you take this with you and tell it to your communities everywhere - the people of Israel are strong, the State of Israel is strong, there is no enemy that can destroy us."

"We will not place ourselves in a position where anyone will, in an effective manner, threaten us with destruction, because if there was one thing that has changed since the establishment of the State of Israel 60 years ago until today, it is not that here the Jews are safe in every situation, in every condition and that there will not be any dangers," Olmert said. "There are also dangers here, like in many other places.

"But here, my friends, the Jewish people can fight, and when it needs to, it fights, and when it fights, it wins."

Last week, Transportation Minister Shaul Mofaz said during a visit to the US that Teheran would likely achieve control of the technology to enrich uranium for an atomic bomb within a year.

In the past, the consensus in the intelligence community was that Iran had encountered technical difficulties with fuel enrichment and that its attainment of nuclear capability was much further off, Mofaz said, but a recent IDF Military Intelligence assessment showed that the Islamic Republic could go nuclear before the end of the decade.

Also Tuesday, NATO Secretary-General Jaap de Hoop Scheffer warned that more nations would follow the examples of Iran and North Korea and work to develop nuclear weapons. He said that the possibility that Syria was building a weapons-capable nuclear reactor before the IAF destroyed it on September 6 showed that NATO must find an answer to ballistic missile threats.

"The nuclear ambitions of Iran and North Korea threaten to set in motion a domino effect that will be difficult to contain," de Hoop Scheffer said in a speech at a missile defense conference at the Czech Foreign Ministry.

"If there is a serious suspicion that in Syria there was a facility in the making, it only increases the arguments... for finding a collective answer to a ballistic missile defense threat," the NATO chief said.

CIA Director Michael Hayden said last month that the alleged Syrian nuclear reactor would have produced enough plutonium for one or two bombs within a year of becoming operational.

"The number of states that possess ballistic missiles is already growing, slowly and surely," de Hoop Scheffer said. "The proliferation of ballistic missiles is a reality that concerns us all."

AP contributed to this report.