Following the report, Iran warned Israel of attacking its nuclear facilities.
"Any military offensive on the Islamic republic will not be unanswered and the aggressor will very quickly regret its acts," Iranian Foreign Ministry spokesman Mohammad Ali Husseini said during a press conference in Tehran.
Asked whether it was possible that Israel would attack Iran's nuclear facilities, Husseini replied, "This testifies to the other side's weakness and has no affect on Iran's national decisiveness to continue its nuclear activity for peacedull purposes.
Husseini referred to Prime Minister Ehud Olmert's "slip of the tongue" regarding Israel's nuclear weapons, saying that "such remarks completely clarify to the public opinion that the main threat on global peace and safety, as well as on the region's security, is the Zionist regime."
Foreign Ministry spokesman Mark Regev told Ynet, "I completely deny the Sunday Times report. Israel today fully supports an immediate implementation of Security Council Resolution 1737, which deals with sanctions on Iran. We believe, however, that there is need to boost the diplomatic activity."
'Training to blow up enrichment plant'
Citing what it said were several Israeli military sources, the paper said two Israel Air Force squadrons had been training to blow up an enrichment plant in Natanz using low-yield nuclear "bunker busters".
Two other sites, a heavy water plant at Arak and a uranium conversion plant at Isfahan, would be targeted with conventional bombs, the Sunday Times said.
The UN Security Council voted unanimously last month to slap sanctions on Iran to try to stop uranium enrichment that Western powers fear could lead to making bombs. Tehran insists its plans are peaceful and says it will continue enrichment.
Israel has refused to rule out pre-emptive military action against Iran along the lines of its 1981 air strike against an atomic reactor in Iraq, though many analysts believe Iran's nuclear facilities are too much for Israel to take on alone.
Round-trip to Iranian targetsThe newspaper said the Israeli plan envisaged conventional laser-guided bombs opening "tunnels" into the targets. Nuclear warheads would then be used fired into the plant at Natanz, exploding deep underground to reduce radioactive fallout.
Israeli pilots have flown to Gibraltar in recent weeks to train for the 2,000 mile (3,200 km) round-trip to the Iranian targets, the Sunday Times said, and three possible routes to Iran have been mapped out including one over Turkey.
However it also quoted sources as saying a nuclear strike would only be used if a conventional attack was ruled out and if the United States declined to intervene. Disclosure of the plans could be intended to put pressure on Tehran to halt enrichment, the paper added.
Iran's President Mahmoud Ahmadinejad has called for Israel to be "wiped off the map". Israel, widely believed to have the Middle East's only nuclear arsenal, has said it will not allow Iran to acquire nuclear weapons.
AFP contributed to the report