"We think that military action against Iran by Israel would not be the right approach. We've said that both publicly and privately to the Israelis," Cameron told a parliamentary committee.
- Panetta: US will act against Iran if it has to
Netanyahu at AIPAC: A nuclear Iran must be stopped
Obama says US 'won't hesitate to use force on Iran'
"We think this track of sanctions and pressure has further to run. And we think we should run that as hard and as fast as we can to persuade the Iranians to change track."
Western powers have imposed economic sanctions on Iran and offered diplomatic incentives to stop what they believe is a program to build a nuclear bomb.
Tehran insists its atomic drive is for peaceful purposes.
Prime Minister Benjamin Netanyahu warned during a US visit on Monday that it could not afford to wait "much longer" for sanctions to work, and said he would "never let my people live in the shadow of annihilation."
At a cabinet meeting on Tuesday, Cameron's national security advisor gave an hour-long presentation to ministers focusing on Iran, a Downing Street spokesman said.
Cameron was later asked if he would prefer a nuclear armed Iran or a military strike, and replied that they were "both extremely bad options."
While refusing to rule anything out, the British leader said that joining military action by its allies "is not a decision that we have made."
"We do have minesweepers in the Gulf, we're part of international forces that believe it's important that we keep sea lanes open. We work with our allies. We haven't made any decisions about military action," he said.
Cameron insisted that sanctions imposed on Iran "are having an effect" and argued: "That sanction and pressure have further to go."
Britain, France, Germany, China, Russia and the US offered on Tuesday to resume long-stalled talks with Tehran over its contested nuclear drive.
- Receive Ynetnews updates
directly to your desktop