In an interview published Tuesday by "The Times" of London, Mr Sharon insisted that Tehran was "a centre of world terror" and should be attacked immediately after the US and Britain have finished with Iraq of Saddam Hoseyn, whom he labelled as :insane".

President George W. Bush has charcterised the Islamic Republic as an "evil State", alongside with Iraq and North Korea.

Washington cut all relations with the Islamic Republic after Iranian revolutionary students stormed the American embassy in Tehran on 4 November 1979 and took 55 diplomats and staff as hostage for 44 days.

Iran marked the take over anniversary on Monday and arrested Mr. Abbas Abdi, one of the leader of the attackers turned reformist and staunch supporters of normalisation with the United States.

Iran’s President Hojjatoleslam Mohammad Khatami backed both the attack on the embassy and the hostage taking, explaining it as the "wrath of the Iranian people against America’s wrongdoings in Iran", but said that the Iranians did not want to "humiliate" the American people.

In his interview, the embattled hard line Israeli Premier said Iran should be put under pressure "the day after" action against Baghdad ends because of its role as a "centre of world terror".

He asserted that while Washington was inevitably focusing on Saddam Hussein the White House shared his concern that Iran was also seeking weapons of mass destruction, and developing missiles capable of striking Israel and even Europe.

"One of the things I mentioned is that the free world should take all the necessary steps to prevent irresponsible countries from having weapons of mass destruction: Iran, Iraq of course, and Libya is working on a nuclear weapon".

He also issued his clearest warning yet that Israel would strike back if attacked by Iraqi chemical or biological weapons, no matter how much Washington sought to keep its controversial Middle Eastern ally out of any war in Iraq.

He made clear that western Iraq would be one of the first areas targeted by the US in any invasion, saying that lessons had been learnt from strategic mistakes of the 1991 Gulf War when Iraq successfully fired 39 Scud missiles into Israel.

Mr Sharon, 74, was speaking as he conducted high-level negotiations to keep his Government afloat after the desertion of his centrist coalition partners. Last night he survived three no-confidence votes, giving him more time to forge a coalition with small right-wing parties. He rejected calls for early elections.

The Knesset also approved the appointment of Shaul Mofaz, the hawkish former Israeli Army chief, as Defence Minister.

In other significant changes of tone and policy, Mr Sharon told The Times that:

 Yassir Arafat, the Palestinian leader, could have an ongoing role as a "symbol", but could not have a role overseeing financial or security functions. This was a departure from previous statements that Mr Arafat was entirely "irrelevant".

 Mr Sharon himself would continue to lead the country, elections willing, for up to five years. There had been widespread speculation that he would retire within two years.

 The Israeli Government is considering an unprecedented crackdown on the Islamic movement within its own borders, fearing that a "small minority" of Israeli Arabs are turning against the country.

Mr Sharon made it abundantly clear that he would not hold back from retaliating, as Israel did at Washington’s behest in 1991, if his nation came under serious attack. "First, we understand the sensitivity. We are living here, we were born here. Israel will make every effort not to interfere," he said.

But he warned: "If Israel, and I made it very clear, is attacked by weapons of mass destruction . . . Israel will react. Is it clear? I believe that they understand that Israel will not be able not to defend itself."