Gordon Brown tries to repair the special friendship with America

Ahead of his annual Mansion House foreign policy speech tonight, the Prime Minister made clear that diplomacy was working with Tehran and had to be ratcheted up further.

He said that "nothing should be ruled out" in terms of military action, but stressed that sanctions and other routes were getting results.

Mr Brown's remarks chimed with those of senior American officers who said striking Iran would be a mistake as the US military was too stretched to deal with a broader conflict.

He was set to stress in his speech that Britain's "special relationship" with Washington remained at the heart of his foreign policy although he will declare that the US's improving co-operation with other EU states such as France and Germany paves the way for reform of the UN.

Mr Brown was also expected to warn Pakistan's President Musharaff that elections had to be held as soon as possible.

The Prime Minister used a TV interview to insist Britain had a network of relationships with the EU, Nato and the Commonwealth and wanted its strong links with the US to rebuild international organisations weakened by disagreement over the Iraq war.

But when asked directly whether he would back the US in military action against Tehran, he told Sky News: "The diplomatic route is bearing some success and it's got to be stepped up over the next period of time, if that becomes necessary.

"I think people are genuinely worried about the nuclear ambitions of Iran, in contravention of everything that has been promised. I believe, however, that while nothing should be ruled out it is important to say that the sanctions we are placing on Iran are now having some effect."

Admiral William Fallon, head of US Central Command, which oversees military operations in the Middle East, told the FT today attacking Iran was "not the first choice in my book".

"None of this is helped by the continuing stories that just keep going around and around that any day there will be another war, which is just not where we want to go," Admiral Fallon said.

A Downing Street source said Mr Brown was determined there would be "no misunderstandings" about his enthusiasm for the special relationship.

Senior figures in Washington have become increasingly concerned that the new Premier has been trying to distance himself from President Bush.

Mr Brown was expected to tell the Guildhall event tonight that the arrival of new leaders in France and Germany means that Europe and the US have the best opportunity for closer co-operation for "many years".

In an interview for Sky news, Mr Brown said: "America is our most important ally.

But the great change that is taking place, that I think is to the advantage of everyone, is that France and Germany and the European Union are also moving more closely with America."

The Prime Minister will argue the relationship with the US is vital in efforts to reform international institutions and tackle issues including climate change, security and global economic competition.

Britain's relationship with America has been strained since Mr Brown visited Washington in July and signalled a break from Tony Blair's cosy friendship with Mr Bush.

The White House is also said to have been deeply disturbed by Mr Brown's appointment of Lord Malloch Brown, a former diplomat who was an outspoken critic of the Iraq war, as a foreign minister.

Analysts also detected cracks in the "special relationship" over the withdrawal of some British troops from southern Iraq.

Mr Bush has since made overtures to other EU leaders, including the new French President Nicolas Sarkozy.

Mr Brown said it was "to the advantage of everyone" that France, Germany and the EU as a whole were "moving more closely with America".

In a deliberate contrast to Iraq, where America and Britain essentially went it alone, Mr Brown is calling on President Sarkozy and German Chancellor Angela Merkel to join a broad alliance putting diplomatic pressure on Iran.

Ministers fear that Tehran's decision to restart its nuclear power programme could destabilise the entire region.

Mr Brown believes the economic sanctions already in place are having some effect but insists that the response will be toughened if Iran fails to halt the programme.