Iran on Sunday said Israel would be making a "fatal mistake" should it resort to military action against Tehran's nuclear program and dismissed veiled threats from the Jewish state as a "childish game."

On Saturday, Israel repeated its stand on the issue, saying it would not accept a nuclear Iran under any circumstances and was preparing for the possible failure of diplomatic efforts.

While Defense Minister Shaul Mofaz stopped short of an outright threat of military action, he said Israel "must have the capability to defend itself...and this we are preparing."

Iranian Foreign Ministry spokesman Hamid Reza Asefi said Israel was only trying to add to Western pressure on Iran to give up its nuclear program.

"We consider Mofaz's comments a form of psychological warfare. Israel knows just how much of a fatal mistake it would be (to attack Iran)," Asefi told reporters. "This is just a childish game by Israel."