President Bush says he still believes diplomacy is the best way to deal with Iran's nuclear ambitions.  VOA's Paula Wolfson reports Mr. Bush also makes clear he supports plans to prevent Iran's president from visiting the site of New York's World Trade Center, where thousands were killed by terrorists on September 11, 2001.

President Bush says he remains hopeful the Iran nuclear dispute can be resolved peacefully.

"And to this end we are working with allies and friends to send a consistent message to the Iranians that there is a better way forward for them than isolation - financial isolation and/or economic sanctions," Mr. Bush said.

The United States and its allies say they fear Iran wants nuclear technology to develop weapons.   Tehran says its nuclear ambitions are peaceful, and its desire is to provide electricity for its people.

The focus has been on diplomacy to resolve the dispute, although the Bush administration has said that the military option is never taken off the table.

Earlier this week, the debate over how best to deal with Iran was rekindled when new French Foreign Minister Bernard Kouchner was quoted as saying the world should prepare for the possibility of war if negotiations fail.  He later downplayed the remarks, saying diplomacy is paramount.

At a wide-ranging White House news conference, President Bush was asked about Kouchner's comments.  He made no mention of military action in his answer and spoke only of diplomatic resolve.

"I believe it is imperative that we continue to work in a multi-lateral fashion to send that message and one place to do so is at the United Nations," Mr. Bush said.

Iran responded angrily to even the mention of military action.  Iranian officials said their country would use any means to defend itself.  They also said Tehran is drawing up a retaliation plan should it come under Israeli attack. 

Mr. Bush noted that Iranian President Mahmoud Ahmedinejad has spoken in the past of strikes against Israel, and said his threats should be taken seriously.

"This is a person that constantly talks about the use of force on Israel, for example, and Israel is our very staunch and firm ally," Mr. Bush said.

Mr. Bush made clear he is in firm agreement with a decision by the New York City Police Department to deny a request by the Iranian president to place a wreath at the site of the World Trade Center in memory of the victims of the September 11th, 2001 attacks.

A spokesman for the police force says they denied the request because of ongoing construction and security concerns.  But President Bush indicated there may be emotional reasons as well in a city that suffered so much at the hands of terrorists.

"I would understand why they would not want somebody running a country that is a state sponsor of terror there at the site," Mr. Bush said.

Mr. Ahmadinejad is coming to New York next week to address the U.N. General Assembly.