Retired admiral Dennis Blair said US intelligence assesses that Iran has not restarted nuclear weapons design and weaponization work that it halted in late 2003.
"Although we do not know whether Iran currently intends to develop nuclear weapons, we assess Tehran at a minimum is keeping open the option to develop them," he said in an annual threat assessment to Congress.
The assessment essentially reaffirmed a 2007 intelligence report that at the time was widely seen as a setback to international efforts to put pressure on Iran to abandon its nuclear program.
Blair's predecessor, retired admiral Mike McConnell, later said it had been a mistake to make public the key judgments of the intelligence assessment because it suggested Iran was no longer pursuing nuclear weapons.
Asked about it at a Senate hearing, Blair acknowledged it was a difficult question to deal with in a public setting.
"I can say at this point that Iran is clearly developing all the components of a deliverable nuclear weapons program – fissionable material, nuclear weaponizing capability and the means to deliver it," he said.
"Whether they take it all the way to nuclear weapons and become a nuclear power will depend a great deal on their own internal decisions," he said.
"Nobody in the international community wants to see a nuclear armed Iran, either. The question is what are you going to do about it," he said.
"If the international community can put together a real package of sticks and potential reassurances that meets some of these concerns that Iran feels, there is a chance, there is a chance they will choose another course," he said.
But he said that will be difficult because the international community remains divided over what to do.
The assessment comes at a time when the new US administration and Tehran appear to be in a diplomatic dance over whether and how to engage in direct dialogue.
Blair's report said US intelligence assesses that Iran does not currently have a nuclear weapon, and does not yet have enough fissile material for one.
Iran has made significant progress over the past two years in installing and operating centrifuges at its main centrifuge enrichment plant in Natanz, he said.
"We judge Iran probably would be technically capable of producing enough highly enriched uranium (HEU) for a weapon sometime during the 2010-2015 time frame," his report said.
But it said the State Department intelligence office believes Iran is unlikely to be able to produce enough enriched uranium for a nuclear weapon before 2013 because of foreseeable technical problems.
'They can make a serious missile force'
Asked about Iran's launch last week of a domestically manufactured satellite into orbit, Blair said it demonstrated that the Iranians are mastering multi-stage missile technology that could be used for either peaceful or military purposes.
"If they put resources on it, they can make a serious missile force," he said.
Blair said the United States should not count on a change in policy in Iran even if President Mahmoud Ahmadinejad is turned out of office in June presidential elections.
"We expect (Supreme leader Ali) Khamenei will attempt to manipulate the presidential election, largely by limiting the range of candidates," his assessment said.
Ahmadinejad's re-election prospects are less certain because of his management of the economy, it said.
"The sharp fall in global oil prices will add to Iran's economic problems, but Tehran has a substantial cushion of foreign reserves to support social and other spending priorities," it said.
"Less energy revenues may also help to dampen its foreign policy adventurism," it said.