While the Bush administration's main focus of late is Tehran's determination to advance its nuclear technology, diplomats and sources in the Pentagon who asked not to be identified told the Los Angeles Times peace in the Persian Gulf region faces greater threats.

"The nuclear program is still clearly years down the road," one defense official said. "The more immediate threat is Iranian meddling and arms supplies into Iraq."

U.S. Defense Secretary Robert Gates has already decided a military strike against suspected Iranian nuclear sites could be counterproductive, defense officials said.

Escalation of tensions would be more likely by isolated ground attacks by either U.S. or Iranian forces, particularly if hostages became part of the equation, sources told the Times.

That would be most likely something to expect from the Quds Force, an elite unit of Iran's Revolutionary Guard Corps, which the U.S. alleges has sent hundreds of members into Iraq to train insurgents and provide weaponry, the report said.