The United States is considering action over what it says is Iran's continued pursuit of nuclear weapons, a senior administration official has said.
Tehran denies it has a nuclear weapons programme
John Bolton's comments came amid reports that UN inspectors had found undeclared nuclear technology in Iran.
Inspectors reportedly found designs for a uranium centrifuge, which is capable of producing weapons-grade material.
The Islamic republic has again denied that its nuclear programme is being used for military purposes.
On Wednesday, President Bush called for a tightening up of international treaties, to stop the spread of nuclear weapons.
Iran and North Korea had both exploited loopholes allowing the enrichment and reprocessing of uranium for peaceful purposes, he said - and this had to be stopped.
President Bush criticised the UN nuclear watchdog's procedures, saying that countries suspected of breaking the rules - such as Iran - should not be allowed to sit on the International Atomic Energy Agency (IAEA) committees that enforced them.
Mr Bush's speech has received backing from the UN nuclear watchdog and nuclear powers including China, India and Pakistan.
'Nothing to hide'
Mr Bolton, the US under-secretary of state, said: "There's no doubt that Iran continues a nuclear
"We'll be looking seriously at what to do about Iran," he said at a security conference in Berlin.
He reiterated Washington's demand that the issue be
brought before the UN Security Council.
Iran - along with North Korea and Libya - was given nuclear secrets by Pakistan's top nuclear scientist
In response, Iranian Foreign Minister Kamal Kharrazi
denied that Tehran had a plan to develop nuclear weapons.
"The burden of proof is
on the one who makes the allegations," he told reporters in Rome.
"We have nothing to hide and we are ready to be inspected
seriously by the IAEA inspectors."
Thursday also saw the head of the IAEA, Mohamed ElBaradei, warn of the dangers of the spread of widely available atomic weapons technology.
But, in an article for the New York Times newspaper, he said nuclear powers such as the US, Britain, France, Russia and China should themselves "move towards disarmament".
The IAEA board of governors is due to meet next month to review the situation in Iran.
Late last year, the Islamic state was criticised by the IAEA for concealing uranium and plutonium enrichment programmes.
Tehran subsequently agreed to tougher IAEA inspections of its nuclear facilities.