WASHINGTON -- Vice President Dick Cheney yesterday said Iran is a top threat to world peace and Middle East stability, accusing Tehran of sponsoring terrorism against Americans and building a "fairly robust new nuclear program."

In an interview aired on MSNBC's "Imus in the Morning" show a few hours before President Bush's inaugural address, Cheney warned that Israel "might well decide to act first" militarily to eliminate Iran's nuclear capabilities if the United States and its allies fail to resolve the standoff with Tehran diplomatically.

"Given the fact that Iran has a stated policy that their objective is the destruction of Israel, the Israelis might well decide to act first, and let the rest of the world worry about cleaning up the diplomatic mess afterwards," Cheney said. In 1981, Israel sent warplanes to destroy Iraq's nuclear reactor. "We don't want a war in the Middle East, if we can avoid it," he said.

In the Don Imus interview, Cheney made a rare admission, saying he had miscalculated how quickly Iraqis would be able to recover from Saddam Hussein's government and begin running their country.

"Certainly, in the case of the Iranian situation, I think everybody would be best suited by or best treated and dealt with if we could deal with it diplomatically," Cheney said. "You look around the world at potential trouble spots, Iran is right at the top of the list."

Iran has denied that its nuclear facilities are used for producing weapons. The administration disagrees.

Some foreign policy experts predict that Bush might use military force to destroy Iran's nuclear program during his second term, but the president and Cheney have promised to pursue diplomacy first.

Current Bush policy calls for European nations to take the lead in negotiating a full and verifiable halt to Iran's nuclear program. Bush has said that all options are on the table if Iran does not comply.