The UK government should persuade the US administration to engage in direct talks with Iran over its controversial nuclear programme, MPs have said.
Tehran says its nuclear programme is entirely civilian
The Foreign Affairs Committee concluded Iran still had "ambitions" and by 2015 could have gained the ability to quickly produce nuclear weapons.
Its report says existing UN sanctions are not "sufficiently robust" to coax Iran to stop work in the field.
Iran insists its programme is aimed purely at generating electricity.
The country refuses to stop enriching uranium - which can be used as fuel in a nuclear power station or the basis of a nuclear bomb - but it denies having a secret weapon programme.
The Commons Foreign Affairs Committee suggests there is a "strong possibility" that by 2015 Iran could have the ability to manufacture a nuclear device within a short period of time through gaining non-military nuclear assets - known as "breakout" capability.
Mike Gapes, chairman of the committee and MP for Ilford South, said: "Based on the evidence we have received and our own visit to Iran, we believe its nuclear ambitions remain.
"Iran must not be allowed to develop a nuclear weapon. If it did, it is very likely to lead to a domino effect in the Middle East. This challenge requires the world's urgent attention."
It wants the government to use its influence to encourage the Bush administration to change its policy.
The report said: "We recommend the government urges Washington to consider offering a credible security guarantee to Iran if the Iranian government... will guarantee it will not enter into a nuclear weapons programme... "
The UN security council is considering bringing new sanctions against Iran and that decision could take place as early as Monday.
But the committee warns they could prove counter-productive and provide Iranian President Mahmoud Ahmadinejad with a scapegoat for his economic failings.
Iran has ignored previous resolutions demanding it freeze its uranium enrichment, and Washington has said it will only open talks if the enrichment stops.
Last year, a US intelligence assessment claimed that Iran had suspended work on developing a nuclear weapon in 2003.
In its report, the committee said this conclusion made military action less likely and warned against such a move.
"We remain of the view that such a military strike would be unlikely to succeed and could provoke an extremely violent backlash across the region," it said.
The report also said it was equally important that the nuclear issue was not a distraction from addressing what it calls Iran's "malign influence" in the Middle East and support for insurgents in Iraq and Afghanistan.