Iran will "annihilate" the Israeli cities of Tel Aviv and Haifa if it comes under attack by the Jewish state, supreme leader Ayatollah Ali Khamenei warned on Thursday.

"Every now and then the leaders of the Zionist regime threaten Iran with a military attack," Khamenei said in a live televised speech from the northeastern holy city of Mashhad, referring to Israel.

"They should know that if they commit such a blunder, the Islamic republic will annihilate Tel Aviv and Haifa," he said.

Iran is said to possess ballistic missiles capable of reaching Israel. It also has close relations with Israel's foes in the region, including Lebanon's Hezbollah and Palestinian militants in the Islamist-ruled Gaza Strip.

Khamenei spoke with little sign of an easing in Tehran's position in its confrontation with the West over its disputed nuclear programme of uranium enrichment.

Israel, widely believed to be the Middle East's sole but undeclared nuclear power, suspects that Tehran is seeking atomic arms, a fear shared by the United States and Western powers, and has not ruled out a military strike.

Washington has also refused to rule out the military option, but insists it prefers a diplomatic solution to the nuclear stand-off.

US President Barack Obama in Israel on Wednesday accepted that the Jewish state would not cede its right to confront Iran's nuclear threat to the United States.

Israel welcomes Obama assurances on Iran
Jerusalem (AFP) March 21, 2013 - Israel welcomes assurances US President Barack Obama gave on the Iranian nuclear programme on his milestone visit to the Jewish state, a cabinet minister said on Thursday.

"The president is firmly committed to acting against Iran's nuclear programme and to strengthening military, diplomatic and intelligence cooperation between the two countries," newly sworn-in Intelligence Minister Yuval Steinitz said.

"The president also announced the start of discussions on the extension of US military aid to Israel beyond 2017," said Steinitz, whose responsibilities also include international relations.

At a joint news conference with Prime Minister Benjamin Netanyahu on Wednesday, Obama said Washington would enter talks to renew a multi-billion-dollar military aid package for Israel after it expires in 2017.

He also said he "would not expect that the prime minister would make a decision about his country's security and defer that to any other country."

"The important thing is that aid to Israel is not conditional on Israel abandoning its right to self-defence and ability to make independent decisions on all threats, including the Iranian one," Steinitz said.

Israeli public radio said Netanyahu and Obama had "reached a deal" whereby the Israeli premier for the first time clearly said he believed in the president's commitment to not allow Iran to achieve military nuclear arms, and in exchange Obama acknowledged Israel's right to self-defence.

Western powers suspect Iran's civilian nuclear programme is a cover for a quest to achieve nuclear arms, a claim the Islamic republic denies.

According to Israeli media Obama's charm offensive to win over the Israeli public was going well.

"A joke or a little teasing, a few words in Hebrew and we're filled with huge love for the man, who for a moment looks as though he likes us," wrote Sima Kadmon in the daily Yediot Aharonot.

She said that Obama understood that "neither he nor any other American president will be able to press Israel if there is no relationship of trust, of friendship, of understanding."

Maariv daily's Shalom Yerushalmi wrote that "Obama came to settle in people's hearts, and succeeded."

"But we should make no mistake, there are no free gifts and no gestures without interests," he added.