WASHINGTON - A US congressional committee approved tougher sanctions on Iran on Wednesday, hitting out at Tehran's central bank following an alleged Iranian plot to kill the Saudi ambassador to Washington.

The bipartisan legislation has good prospects for clearing the House of Representatives in the near future. In the Senate, lawmakers in both parties are working on similar legislation, increasing the likelihood that some version will become law.

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"I hope we can ... have these bills on the president's desk in time to hand the Iranian regime a nice holiday present," said Representative Ileana Ros-Lehtinen, the Republican chairman of the House Foreign Affairs Committee and a sponsor of the House bill.

The legislation requires the US president to impose sanctions on Iran's central bank if he determines it is facilitating terrorism or the development of nuclear weapons, or supporting Iran's elite military force, the Islamic Revolutionary Guard Corps.

"I believe the central bank of Iran is not only engaging in those activities; I believe it is the ultimate engine of those activities," said the author of the central bank provision, Representative Howard Berman, a Democrat.

The sanctions would effectively block from the US economy any foreign bank involved in significant transactions with Iran's central bank. The legislation was approved by the House panel on a voice vote.

It would extend and tighten existing US sanctions on Iran's energy and banking sectors that were approved by Congress last year as part of Washington's efforts to deter Iran from developing nuclear weapons.

The British government said on Wednesday that it is keeping its options open in relation to military action against Iran.

"We want a negotiated solution - but all options should be kept on the table," a Foreign Office spokesperson said on Wednesday.

"The British government believes that the dual track strategy of pressure and engagement is the best approach to address the threat from Iran's nuclear program and avoid regional conflict."

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