"I hope we can solve it diplomatically, but I will never take any option off the table," he said.
Iran denies it is trying to build nuclear weapons and says its nuclear program is for energy purposes only.
Bush's comments come after his administration denied it is sending special forces into Iran to carry out secret reconnaissance missions to identify potential nuclear and other targets. The allegations were made in an article by Seymour Hersh, who last year uncovered the Abu Ghurayb prisoner-abuse scandal.
The Pentagon described his article as filled with "inaccuracies."