With his decision, Olmert rejected an appeal by the Israeli army's military intelligence service to assume responsibility for Iran, the radio added, without giving further details.

Known by its Hebrew acronym AMAN, the military intelligence service, with an estimated 7,000 employees, is regarded as Mossad's chief rival.

Olmert's decision comes on the heels of a meeting with Mossad chief Meir Dagan, the hawkish political advisor to former prime ministers Ariel Sharon and Benjamin Netanyahu.

Israeli media reported that Mossad's annual budget was doubled last year largely due to increased concerns over the Iranian nuclear program.

In recent months, US, Arab and Israeli newspapers have been rife with speculation about the likelihood of an American or Israeli attack against Iran's nuclear sites. American and Israeli officials have denied those reports.

In December, Dagan, 60, predicted Iran would be able to manufacture a nuclear bomb within one to two years.

Israeli fears of Iran were heightened after Iranian president Mahmoud Ahmadinejad called for Israel to be wiped off the map last October.

Mossad answers to a parliamentary sub-committee made up of members of the defense and foreign affairs committees in the Israeli legislature.

On June 7, 1981, Israeli war planes destroyed the Iraqi nuclear plant at Osirak, close to Baghdad.

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