Mr. Bush said his goal is to keep the Iranians from having the capability or the knowledge to have a nuclear weapon.
"I know we're here in Washington (where) prevention means force," Mr. Bush said. "It doesn't mean force necessarily. In this case it means diplomacy."
Mr. Bush and other administration officials have said repeatedly that the military option is on the table, CBS News White House correspondent Bill Plante reports, and White House officials acknowledge "normal" military planning is under way. Several reports published over the weekend said the administration was studying options for military strikes, and an account in The New Yorker magazine by Seymour Hersch raised the possibility of using nuclear bombs against Iran's underground nuclear sites.
Mr. Bush did not directly respond to that report but said, "What you're reading is just wild speculation."
But Mr. Bush said he was correct to include Iran in the "axis of evil" with Iraq and North Korea and he's glad to see other countries taking the threat from Iran seriously, too.
"I got out a little early on the issue by saying axis of evil," Mr. Bush said. "But I meant it. I saw it as a problem. And now many others have come to the conclusion that the Iranians should not have a nuclear weapon."
The White House sought Monday to minimize new speculation about a possible military strike against Iran while acknowledging that the Pentagon is developing contingency plans to deal with Tehran's nuclear ambitions. The Pentagon has refused to further describe its planning.
White House press secretary Scott McClellan refused to confirm or deny a report in The New Yorker magazine that raised the possibility of using nuclear bombs against Iran's underground nuclear sites.
"Those who are seeking to draw broad conclusions based on normal military contingency planning are misinformed or not knowledgeable about the administration's thinking," he said.
The New Yorker article quotes one former senior intelligence official as saying that Mr. Bush views Iran's President Mahmoud Ahmadinejad as a "potential Adolph Hitler," and Hersch says some inside the Pentagon have proposed using tactical nuclear weapons to penetrate the increased defenses.
Hersch tells CBS News' The Early Show there is "a lot of debate" over whether to launch a nuclear attack.
"Nobody in the Pentagon seriously thinks that it could be an option. It's an impossible option. They wanted to get rid of it," Hersch says. "And as I write, they are going to come back to the president with a formal recommendation that they take this option out of the plan. And if it doesn't happen some people are willing to claim they will actually resign over the issue."
Hersh also tells Early Show co-anchor Hannah Storm that while the administration is publicly advocating diplomacy, there are clandestine American forces in Iran right now.
"They're on the ground, they're collecting intelligence. They're talking to the ethnic minorities inside Iran that oppose the government and they're also getting ready to pick target," Hersh says. "In order for the bombs to be accurate, men on the ground have to be there to paint the target. It's all part of the obvious planning for an offensive if we decide to have one."
The Washington Post reported Sunday that Britain – Washington's closest ally in the War on Terror – is already planning for a potential U.S. strike. But British Foreign Secretary Jack Straw, in an interview with the British Broadcasting Corp., called the idea of a nuclear strike "completely nuts."
Straw said Britain would not launch a pre-emptive strike on Iran and he was as "certain as he could be" that neither would the U.S. He said he has a high suspicion that Iran is developing a civil nuclear capability that in turn could be used for nuclear weapons, but there is "no smoking gun" to prove it and rationalize abandoning the plodding diplomatic process.
"The reason why we're opposed to military action is because it's an infinitely worse option and there's no justification for it," Straw said.
Meanwhile, a top European Union official said Monday that the 25-nation bloc should consider sanctions against Iran, including a visa ban on nuclear officials, because Tehran refuses to cooperate with the United Nations on its nuclear program.
"We have to begin thinking about that possibility," EU foreign policy chief Javier Solana told reporters outside an EU foreign ministers meeting.
Solana ruled out, however, that EU would back any military action.
"Any military action is definitely out of the question for us," he said.
Solana said that the EU would await Iran's response to a U.N. Security Council call for a halt to uranium enrichment before considering any actions. Iran has so far rejected international demands for clarity over its nuclear intentions.
"Iran has to respond to the Security Council. We have to be prepared in case they fail," Solana said.
Defense experts say a military strike on Iran would be risky and complicated. U.S. forces already are preoccupied with Iraq and Afghanistan, and an attack against Iran could inflame U.S. problems in the Muslim world.
"Surely, the reports will spur debate about U.S. military action against Iran, particularly since U.S.-Iran talks regarding Iraq are tentatively scheduled for mid-April and because U.S. military action would be opposed by most world leaders," CBS News foreign affairs analyst Pamela Falk says.
The U.N. Security Council has demanded Iran suspend its uranium enrichment program. But Iran has so far refused to halt its nuclear activity, saying the small-scale enrichment project was strictly for research and not for development of nuclear weapons.
Mr. Bush has said Iran may pose the greatest challenge to the United States of any other country in the world. And while he has stressed that diplomacy is always preferable, he has defended his administration's strike-first policy against terrorists and other enemies.
"The threat from Iran is, of course, their stated objective to destroy our strong ally Israel," the president said last month in Cleveland. "That's a threat, a serious threat. It's a threat to world peace; it's a threat, in essence, to a strong alliance. I made it clear, I'll make it clear again, that we will use military might to protect our ally."
Pentagon spokesman Lt. Col. Mark Ballesteros would not comment Sunday on reports of military planning for Iran. "The U.S. military never comments on contingency planning," he said.
Stephen Cimbala, a Pennsylvania State University professor who studies U.S. foreign policy, said it would be no surprise that the Pentagon has contingency plans for a strike on Iran. But he suggested the hint of military strikes is more of a public show to Iran and the public than a feasible option.
"If you look at the military options, all of them are unattractive," Cimbala said. "Either because they won't work or because they have side effects where the cure is worse than the disease."