James Schlesinger, a former defense secretary who headed the panel, expressed concern that loss of confidence could tempt countries that rely on the US nuclear umbrella for protection to develop their own nuclear arms.

"The strength of the US nuclear umbrella, the credibility of that umbrella is a principle barrier to proliferation," he said.

US Defense Secretary Robert Gates convened the panel after a series of embarrassing incidents in which nuclear weapons and components were mishandled by the military.

In one case, nuclear-armed cruise missiles were loaded onto a B-52 bomber and flown across the country without anyone discovering the error for 36 hours. In another, nose cones with nuclear triggers were mistakenly shipped to Taiwan as helicopter batteries.

Gates fired the air force secretary and chief of staff, and launched changes in the air force.

"The US nuclear deterrent remains safe, secure and reliable; no one should doubt our capabilities or our resolve to defend US and allies' interests by deterring aggression," Gates said in a statement Thursday.

But the Schlesinger panel found that inattention to the nuclear mission has seeped through the Defense Department with the notable exception of the US Navy, which is responsible for US submarine-launched nuclear missiles.

"We emphasize that deterrence must start from the top, that the services indeed have picked up clues over the years since the end of the Cold War that the interest in deterrence at the highest levels of DOD (Department of Defense) has diminished," Schlesinger said.

"And if deterrence is in the eye of the beholder, it is a political statement that must come from the very highest offices of the government, not only here in the DOD but from the White House, from the Department of State, and the like," he told reporters.

The panel's report said it found "a distressing degree of inattention to the role of nuclear weapons in deterrence among many senior DoD military and civilian leaders.

"Many lack the foundation of experience for understanding nuclear deterrence, its psychological content, its political nature and its military role -- which is to avoid the use of nuclear weapons," it said.

The panel recommended organizational changes aimed at strengthening policy and oversight at high levels of the defense department.

It urged Gates to agree to create an assistant secretary of defense for nuclear deterrence to develop new deterrence strategies and oversee the work of a myriad of Pentagon offices involved in nuclear work.

The panel also found that the US Strategic Command had too many other responsibilities, and should be more narrowly focused on the nuclear forces and a few other mission areas.

Pentagon press secretary Geoff Morrell said decisions on which recommendations would be adopted would await the new administration.

International concerns about the US nuclear arsenal peaked with the nuclear blunders, according to Schlesinger.

He said senior Japanese officers publicly raised concerns about the reliability of the US nuclear umbrella, and officials of other countries did so privately.

"Some of the nations in Europe, most notably those in Eastern Europe, who were eager to come under the umbrella by becoming part of NATO, have, particularly in the light of activities in Georgia, had to be reassured once again," he said.

But he said progress has been made to correct the situation.

Asked whether Iran feared a US nuclear attack, Schlesinger said: "I think they would regard that as a much more likely development.

"As you may recall in the recent Democratic primaries, Mrs Clinton observed, 'We can obliterate you,'" he said.

With Hillary Clinton soon to become secretary of state, Schlesinger added: "I don't think that remark will be forgotten in Tehran, even if it is forgotten in this country."

Clinton made the remark in a US television interview in April, during which she was asked what she would do as president if Iran were to launch a nuclear attack on Israel.

"In the next 10 years, during which they might foolishly consider launching an attack on Israel, we would be able to totally obliterate them," Clinton said.

Obama sharply criticized her at the time for the same sort of "bluster and saber-rattling and tough talk" that characterized President George W. Bush.

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