Israel has denied suggestions by Tehran it might attack Iran's nuclear power plant.
Government ministers today dismissed Iran's warnings of an "unimaginable" response if Israel attacked, and Israeli Foreign Minister Mr Shimon Peres said Iran was turning Lebanon into a "ball of explosives" by providing Hizbollah guerrillas with missiles.
The war of words has heightened fears of more carnage in the Middle East after 16 months of Israeli-Palestinian bloodshed, although most political commentators say a regional conflict is unlikely at this stage.
"Israel never had and does not have any intention of attacking Iran," Transport Minister Mr Ephraim Sneh told Israel Radio.
Criticising shooting at Israeli jets over south Lebanon yesterday by the Iranian-backed Hizbollah, Mr Sneh said: "That is a provocation whose intention is to open a new front".
Repeating charges that Israel might attack Iran's nuclear power plant, Iranian Defence Minister Admiral Ali Shamkhani told al-Jazeera television yesterday: "If Israel carries out any military action against Iran, it will face a response that will be unimaginable to any Israeli politician".
Israel has intensified criticism of Tehran since seizing an arms shipment in the Red Sea last month that it said was from the Iran and bound for the Palestinians. Iran and the Palestinian Authority deny any involvement.
Talks between Israeli Prime Minister Mr Ariel Sharon and US President Bush in Washington on Thursday are expected to focus on the Palestinian uprising against Israeli occupation, but the leaders could also discuss Iran.