President George Bush expanded covert action intended to sabotage Iran's suspected effort to develop nuclear weapons last year after sanctions failed to curb Iran's nuclear ambitions, The New York Times has reported.

The paper said the Bush administration briefed Israel on the covert programme after Washington turned down an Israeli request for a new generation of bunker-busting bombs required for a possible attack on Iran.

President Bush also rejected a request for Israeli planes to cross Iraqi air space in case of Israeli strikes on Iran. The Israeli newspaper Haaretz reported last September that the Israeli requests had been spurned.

"The Israelis backed off their plans, at least temporarily," the New York Times said. "But the tense exchanges prompted the White House to step up intelligence-sharing with Israel on new US efforts to subtly sabotage Iran's nuclear infrastructure, a major covert program that Mr Bush is about to hand off to President-elect Barack Obama."

The clandestine US programme, started in early 2008 according to the paper, includes fresh American efforts to penetrate Iran's nuclear supply chain abroad, "along with new efforts, some of them experimental, to undermine electrical systems, computer systems and other networks on which Iran relies."