The international community must show the "courage" to allow sanctions against Iran to work, UK Prime Minister David Cameron has said.
European foreign ministers have agreed financial and trade restrictions aimed at increasing pressure on Iran to halt its nuclear programme.
The PM said it was the right approach, adding he had advised Israel now was "not the time" to take military action.
But he said nothing was "off the table" if Iran made "the wrong choice".
The US and the EU have long suspected that Tehran is trying to develop a nuclear weapon, in contravention of the Nuclear Non-Proliferation Treaty (NPT)
But Iran has always denied any military motivation for the programme, insisting it is for civilian purposes only and within the terms of the NPT.
'Losing grip'European Union ministers meeting in Luxembourg on Monday agreed a further tightening of existing financial, trade and energy sanctions.
In a speech to the United Jewish Israel Appeal in London, Mr Cameron said: "I have said to Prime Minister [Benjamin] Netanyahu that now is not the time for Israel to resort to military action.
"Beyond the unpredictable dangers inherent in any conflict, the other reason is this: at the very moment when the regime faces unprecedented pressure and the people are on the streets; and when Iran's only real ally in Syria is losing his grip on power, a foreign military strike is exactly the chance the regime would look for to unite his people against a foreign enemy.
"We shouldn't give them that chance. We need the courage to give these sanctions time to work."
Last month, Mr Netanyahu warned the United Nations General Assembly that time was running out to prevent Iran acquiring sufficient enriched uranium to build a bomb.
However, Mr Cameron said "relentless sanctions" were having a greater-than-expected impact.
'Banana republic'He said that as well as slowing the nuclear programme, oil exports had fallen by 45%, the value of the country's currency had fallen and inflation was soaring and could be as high as 50%.
Mr Cameron said: "Most significantly, there are signs that the Iranian people are beginning to question the regime's strategy with even pro-regime groups protesting at the actions of the government.
"It's mind boggling that the leaders of a nation so rich in oil have succeeded in turning their country into a banana republic desperately trying to put rockets into space while their people suffer.
"The Iranian regime is under unprecedented pressure and faces an acute dilemma. They are leading their people to global isolation and an economic collapse. And they know it."
The prime minister said Iran could end the pressure, adding: "In the long term, if Iran makes the wrong choice, nothing is off the table. A nuclear armed Iran is a threat to Israel. And a threat to the world. And this country will work unwaveringly to prevent that from happening."
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