Olmert attended the meeting in order to brief the committee members on the Iranian issue, as well as on the situation on the northern front and on the negotiations on the core issues with the Palestinians.
The Iranian issue was raised during US President George W. Bush's visit to Israel last week.
"Despite what has been said in the US National Intelligence Estimate, Iran was a danger and continues to be a danger. There is room to act in order to remove this danger, and the US is definitely aware of this," the prime minister said Sunday during the weekly cabinet meeting.
Bush referred to Iran on Sunday as "the world's leading state sponsor of terror ", and called on the US and its Arab allies to unite in order to confront this threat "before it is too late".
According to Olmert, although the US intelligence report concludes that Iran had halted its nuclear program, "Our conclusions are not necessarily similar to what may be understood from the report's wording.
"As far as Israel is concerned, the Iranians are continuing their efforts to create unconventional abilities, and we must therefore use all means to stop them."
The prime minister added that he had discussed the issue with President Bush. "He too said, in the sharpest way, that Iran was and still is a danger in terms of its desire to create nuclear abilities, and this is where the conclusion on what should be done is derived from.
"There are many options that should be taken, wisely, firmly and in a consistent manner. The international activity on this issue must continue, and I have reason to believe, based on my talks with the president, that it won't stop.
"I made it clear that Israel would not be able to accept a nuclear Iran, and there is no option being rejected in advance. Anything that could lead to the prevention of Iran's nuclearization is part of the legitimate context of dealing with the issue," Olmert said.
'I do not wish to quarrel with the Egyptians'
Addressing the situation in the Palestinian Authority, the prime minister said, "If someone should ask Abu Mazen (Palestinian President Mahmoud Abbas) today if he is interested in the existence of a temporary state without Gaza, I doubt whether he would respond positively."
According to Olmert, the American president "understands very well that Israel is holding on to its complete freedom of action in terms of the war on terror, both in the West Bank and in Gaza. We act wherever we see a potential terror activity."
Referring to the negotiations on the core issues, the prime minister said, "We cannot only deal with the marginal problems and claim that these are serious negotiations. We will have to deal with all the basic problems standing between us and the Palestinians. We shall not deal with these issues with an immediate frontal attack. This is a process which will mature, and obligates us to address all the main issues standing between us and them.
Addressing the Egyptian issue, the prime minister told the committee, "We were not happy with the use of the Rafah crossing for the passage of pedestrians. We raised the issue with the Egyptians and are holding talks on this matter with them.
"I see great importance in the existence of quiet channels with the Egyptians, which will allow us to reach understandings, and I do not wish to quarrel with the Egyptians and try and educate them in public.
"I believe that sometimes it is best to show restraint in public statements. There are definitely issues that need to be improved and dealt with, and we will do this directly opposite Egypt," Olmert added, perhaps as a response to remarks made at the same committee by Foreign Minister Tzipi Livni, which led to a crisis in Israel's relations with Egypt.