George Bush today ruled out a change in Washington's Iran policy following the declassification yesterday of a US intelligence report that concluded Tehran had abandoned its nuclear weapons programme in 2003.

The US president denied the national intelligence estimate (NIE) - which said Tehran's determination to develop nuclear weapons "is less ... than we have been judging" - had undercut his administration's repeated assertions that Iran was building nuclear weapons.

"Iran was dangerous. Iran is dangerous. And Iran will be dangerous if they have the knowledge necessary to make a nuclear weapon," Bush told his first White House press conference in nearly seven weeks.

He said the US would continue to work to "isolate" Iran, claiming the NIE was a "warning signal" to the international community.

"I think it is very important for the international community to recognise the fact that if Iran were to develop the knowledge that they could transfer to a clandestine program, it would create a danger of the world.

"And so, I view this report as a warning signal that they had the programme, they halted the programme. The reason why it's a warning signal is they could restart it."

As recently as October, Bush was invoking the threat of a third world war if Iran was not prevented from obtaining the necessary knowledge to make a nuclear weapon.

Asked if he had been "hyping" the threat from Iran, Bush said he was only made aware of the NIE last week and insisted it had changed nothing. "I still feel strongly that Iran is a danger. I think the NIE makes it clear that Iran needs to be taken seriously as a threat to peace. My opinion hasn't changed."

The US intelligence estimate is unfortunate timing for the Bush administration because it could take the steam out of its efforts to push for further sanctions against Iran at the UN.

Iran today welcomed the NIE as proof of its peaceful nuclear intentions. The Iranian foreign minister, Manouchehr Mottaki, speaking before Bush, said he welcomed the US move to "correct" its previous assertions.

"It's natural that we welcome it when those countries who in the past have questions and ambiguities about this case... now amend their views realistically," he told state radio. "The condition of Iran's peaceful nuclear activities is becoming clear to the world."

The report was, however, contradicted by Israel. Its defence minister, Ehud Barak, claimed that Iran had restarted its military nuclear programme.

"It's apparently true that in 2003 Iran stopped pursuing its military nuclear programme for a time. But in our opinion, since then it has apparently continued that programme," he told army radio.

Barak said Israel was "familiar with this American assessment" but there "are differences in the assessments of different organisations in the world about this, and only time will tell who is right."

Israel has not ruled out military action against Iran, but says it prefers a diplomatic solution. Asked if the new US assessment reduced the likelihood of a US military strike on Iran, Barak said it was "possible".

Israel has backed US-led efforts at the UN to impose sanctions on Iran for its refusal to halt uranium enrichment, a process that can be used to develop nuclear weapons.

Britain, which has backed the US campaign for sanctions against Iran, also said the risk remained of Iran acquiring nuclear weapons despite the US intelligence report.

The report, Downing Street said, "shows the intent is there and the risk of Iran acquiring a nuclear weapon remains a very serious issue".

Gordon Brown's spokesman added: "We do need to examine the details of this report. But in overall terms the government believes that the report confirms we were right to be worried about Iran seeking to develop nuclear weapons."

Critics of the administration's policy on Iran have seized upon the report to argue against military action.

The intelligence finding removes, "if nothing else, the urgency that we have to attack Iran, or knock out facilities", said Chuck Hagel, a Republican senator. "I don't think you can overstate the importance of this."

The Democratic leader of the US senate, Harry Reid, urged the White House to adjust its policy and pursue "a diplomatic surge" to engage with Iran.