The Iranian army is conducting a four-day training exercise to test its defences, state TV reported on Saturday, amid rising international tensions over Iran's nuclear programme.

Press TV said the war games started on Friday and were taking place over 800,000 square km in the east of the country.

'The initial stage of the drills will assess the units' performance in setting up primary and secondary command centres and stationing tactical and swift reaction divisions,' Press TV said.

Both Israel and the United States say they do not rule out striking Iran militarily if other means fail to stop the nuclear work that Tehran says is entirely peaceful.

However, US Defense Secretary Leon Panetta has played down talk of any such action, warning that a war with Iran would harm the world economy.

The United Nations' nuclear watchdog has expressed 'increasing concern' about Iran's nuclear programme, after a UN report said the Islamic state appeared to have worked on designing an atom bomb, a charge Iran has repeatedly denied.-Reuters