Interviewed on Fox News, Gates also said the United States would have a "real problem" if Syria and North Korea are collaborating on a nuclear program, but refused to confirm reports to that end.

Asked if President George W. Bush would consult Congress before launching any strikes on Iran, Gates said he would not be drawn on "hypotheticals."

"I will tell you that I think the administration believes at this point that continuing to try and deal with the Iranian threat ... through diplomatic and economic means is by far the preferable approach," he said.

Iran vehemently denies Western allegations it is seeking an atomic weapon, saying its nuclear drive is aimed at providing electricity for a growing population whose fossil fuels will one day run out.

"We always say all options are on the table," Gates said. "But clearly, the diplomatic and economic approach is the one we're pursuing."

The five permanent Security Council members -- Britain, China, France, Russia and the United States -- plus Germany are due to meet to discuss a new draft UN resolution on sanctions against Iran on September 21 in Washington.

"We have to prepare for the worst, and the worst is war," French Foreign Minister Bernard Kouchner said Sunday in an interview broadcast on French television and radio.

"We must negotiate right to the end," he said, but underlined that if Iran possessed an atomic weapon, it would represent "a real danger for the whole world."

The United States has never ruled out taking military action against Iran but on Friday, Iran's supreme leader Ayatollah Ali Khamenei brushed off the notion that it could now threaten the Islamic republic.

He said that Bush had been defeated in his Middle East plans and would one day stand trial for "atrocities" committed in Iraq.

The US and Iranian envoys to Baghdad have held two rounds of landmark talks in Baghdad on Iraqi security this year, but Khamenei's comments underlined the degree of enmity that remains between the two sides just on this issue.

Washington also accuses Iran of providing sophisticated weaponry to Shiite militias in Iraq, and Syria of turning a blind eye to infiltration of its borders by Sunni insurgents, charges both governments deny.

Announcing a limited pullout of troops from Iraq on Thursday, Bush demanded that Iran and Syria end attempts to "undermine" the government of insurgency-wracked Iraq.

The top US commander in Iraq, General David Petraeus, last week accused Iran of fighting a "proxy war" in Iraq through the covert operations unit of its elite Revolutionary Guards.

But the Pentagon chief ruled out using US forces to chase Shiite extremists in Iraq over the Iranian border.

He said "the general view is we can manage this problem through better operations inside Iraq and on the border with Iran -- that we can take care of the Iranian threat ... inside the borders of Iraq."

Gates refused to confirm the veracity of leaked intelligence reports suggesting that North Korea may be helping Syria build a nuclear weapons facility.

"But all I will say is we are watching the North Koreans very carefully. We watch the Syrians very carefully," he said.

If North Korea were flouting its UN obligations to disarm its nuclear program and Syria were pursuing weapons of mass destruction, "I think it would be a real problem," Gates added.

Both Syria and North Korea have dismissed the reports of nuclear collaboration, after foreign media reports that Israeli warplanes had launched an air strike on a possible joint nuclear project on September 6.

Gates declined to comment on the Israeli raid, which US and British newspapers say could have been intended to destroy a nuclear facility in northeast Syria staffed by North Korean technicians.

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