Iran's economy is edging towards collapse due to international sanctions over its controversial nuclear program, Finance Minister Yuval Steinitz told Israel Radio on Sunday.

Prime Minister Binyamin Netanyahu has said that, although sanctions are taking their toll, they are not yet forcing Iran to abandon work that could soon lead to a nuclear warhead.

However, Israeli officials appear increasingly ready to acknowledge the effect of recent American and European sanctions designed to restrict Iran's lifeline oil exports.

"The sanctions on Iran in the past year jumped a level," Steinitz said.

"It is not collapsing, but it is on the verge of collapse. The loss of income from oil there is approaching $45-50 billion by the year's end," he added.

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The United States says it will not allow Tehran to produce the bomb, but sanctions should be given more time to work before force is considered.

American and Israeli commentators say a military strike to destroy Iran's nuclear plants, which Iran says are designed only to develop a nuclear generating capacity, could trigger a regional war with unforeseeable consequences.

In Israel too, some prominent political and military figures question Netanyahu's warning that Iran is so close to the threshold of nuclear capability that military action will soon be the only way to stop it.

But there has been no open split in his coalition over the issue. Steinitz praised the prime minister's speech to the UN General Assembly last week, saying that even though the US thus far has hesitated to delineate "red lines" on Iran's nuclear program it may well do so in the coming months.

According to Steinitz, Netanyahu's speech did a "masterful job" of bringing the Iranian nuclear threat to the forefront of the international community's attention, effectively waking the world from its "dogmatic slumber."

Iranian suffering under soaring inflation

A Foreign Ministry document leaked last week said sanctions had caused more damage to Iran's economy than at first thought and ordinary Iranians were suffering under soaring inflation, although this did not appear to be changing policy.

On Saturday, the Iranian currency slumped to an historic low of about 28,400 rials to the dollar, a fall of about 57 percent since June 2011, meaning a sharp rise in the price of imports.

"The Iranians are in great economic difficulties as a result of the sanctions," Steinitz said.

Parliamentary opponents of Iranian President Mahmoud Ahmadinejad say sanctions are not a major cause of Iran's economic problems and accuse his government of mismanaging the economy.

"The first approach today is that authorities accept their mistakes and failures, second, that they not blame their mistakes on others, and third, that they invite all the pundits and experts to find a way to solve the problems of the economy," Iranian legislator Ezzatollah Yousefian was quoted as saying by the Mehr news agency.

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