The US secretary of state was speaking in Sydney at the start of a three-day official visit to Australia, which will include talks with Canberra and Japan over the vexed Iranian issue.

Ms Rice described Iran as a “troubled state” where an “unelected few repress the desires of its population”.

She said the US would work through the United Nations in an attempt to force the Iranians to allow inspections of their nuclear facilities. Ms Rice said: “I’m quite certain that the [UN’s] Security Council will find an appropriate vehicle for expressing again to the Iranians the demands . . . of the international community.”

It would be a third way between trying to engage with the hard-line government there and attacking its nuclear facilities with the risk of major conflict.

The idea is that regime or policy change could be effected by the Iranian people themselves.

However such a cold war might turn into a hot war if Washington decided this approach would not stop Iran from developing the technology needed for a nuclear bomb.

As the dispute over its nuclear program arrives at the U.N. Security Council today, Iran has vaulted to the front of the U.S. national security agenda amid Bush administration plans for a sustained campaign against the ayatollahs of Tehran.

President Bush and his team have been huddling in closed-door meetings on Iran, summoning scholars for advice, investing in opposition activities, creating an Iran office in Washington and opening listening posts abroad dedicated to the efforts against Tehran.

The internal administration debate that raged in the first term between those who advocated more engagement with Iran and those who preferred more confrontation appears in the second term to be largely settled in favor of the latter. Although administration officials do not use the term "regime change" in public, that in effect is the goal they outline as they aim to build resistance to the theocracy.

"We may face no greater challenge from a single country than from Iran," Secretary of State Condoleezza Rice said in Senate testimony last week. "We do not have a problem with the Iranian people. We want the Iranian people to be free. Our problem is with the Iranian regime."

Cheney blasted the Islamic regime saying there would be “meaningful consequences” if it refuses to comply with international demands to stop its nuclear program.

Condoleezza Rice said, “We face no greater challenge from a single country than Iran… This is a country that seems determined, it seems, to develop a nuclear weapon in defiance of the international community that is determined that they should not get one.”

Donald Rumsfeld warned at a press conference on Wednesday, “I will say this about Iran. They are currently putting people into Iraq to do things that are harmful to the future of Iraq. We know it, and it is something that they, I think, will look back on as having been an error in judgment.”

The Bush administration has unilaterally repealed the Nuclear Nonproliferation Treaty (NPT) by demanding that Iran cease all uranium enrichment.

This action overturns the central principle of the treaty which provides states with the “inalienable right” (NPT phrase) to enrich uranium for peaceful purposes. Two years of intrusive inspections by the UN watchdog agency (IAEA) have not produced “any evidence of nuclear weapons programs” or any diversion of nuclear material. Nevertheless, the US insists that Iran be deprived of the same right that is afforded to every other signatory of the NPT.