Military Intellience chief Amos Yadlin said Sunday at the weekly cabinet meeting that "Iran has crossed the technological threshold" in its quest for nuclear arms.
"Arrival at military nuclear capability is a matter of strategy," Yadlin said. "Iran is accumulating hundreds of kilograms of enriched uranium at a low level and hopes to utilize the dialogue with the West in order to gain time, which is required in order to achieve the capability to manufacture a nuclear bomb."
Yadlin stressed that the American government's new approach of dialogue with Iran is being treated with caution in the Middle East.
"The moderate Arab states think this will come at their cost and will be used for negative purposes by Iran and Syria, who are dragging out time with the appearance of talks but are continuing to arm themselves and to support terrorism," Yadlin said. "The extremist axis hopes the U.S. will change its stance, but they suspect that it is a step that will only advance the formulation of a more efficient coalition against them."
Meanwhile, Iranian media reported on Sunday that Iran has test-fired a new air-to-surface missile, in the Islamic Republic's latest display of its military capability.
The missile test was carried out despite the offer by the administration of new U.S. President Barack Obama to engage Iran in direct talks if it "unclenches its fist".
Iran's Fars News Agency said the domestically produced missile had a range of 110 km (70 miles) and was designed for use by military aircraft against naval targets.
"Now these jet fighters have acquired a new capability in confronting threats," the semi-official news agency said. Iran's Press TV initially said a long-range missile had been tested, but later also used Fars' way of describing it.
Iran often stages war games or tests weapons to show its determination to counter any attack by foes including Israel and the United States, which accuse the Islamic Republic of seeking to develop nuclear bombs. Tehran denies the charge.
The U.S. State Department declined to comment on the Iranian press reports.
A top Iranian military commander last week said that Iranian missiles could now reach Israeli nuclear sites. Iran has often said it has missiles able to reach Israel but had not previously mentioned such specific targets.