It said a peaceful solution led by Britain, France and Germany was "in the best interests of Iran and the international community", while referring to "safeguarding Iran's right to the peaceful use of nuclear technology".

The dossier, entitled Iran's Nuclear Program, was quietly issued in the House of Commons on the eve of Mr Bush's inauguration last week for fear of provoking a public rift with Washington, the newspaper said.

However, it added that privately tensions were running high between the two nations.

The approach contrasts with the British government's two Iraq dossiers, which were trumpeted to make the case for joining the US-led invasion on March 2003.

The Sunday Times said the message that the British Government wanted no part in another war in the Middle East would be reinforced by Prime Minister Tony Blair. He is to meet Mr Bush in Brussels next month.

The paper said Mr Straw would also make the case when he met US secretary of state nominee Condoleezza Rice, a Bush confidante, in London next month.

The perception that the United States is embarking on a course of confrontation with Iran has grown since The New Yorker magazine reported this week that US commandos had been operating inside Iran since mid-2004, secretly scouting targets for possible air strikes.

The Pentagon attacked the story by investigative reporter Seymour Hersh as "riddled with errors of fundamental fact", but did not expressly deny conducting covert reconnaissance missions.

Vice-President Dick Cheney, declaring on a radio talk show this week that Iran was "right at the top of the list" of global problems, warned that Israel might launch a pre-emptive strike on its own to shut down Iran's nuclear program.