Republican Senator Lindsey Graham said his fellow conservative, fresh from their historic elections romp this week, support "bold" action to deal with Iran.

If President Barack Obama "decides to be tough with Iran beyond sanctions, I think he is going to feel a lot of Republican support for the idea that we cannot let Iran develop a nuclear weapon," he told the Halifax International Security Forum.

"The last thing America wants is another military conflict, but the last thing the world needs is a nuclear-armed Iran... Containment is off the table."

The South Carolina Republican saw the United States going to war with the Islamic republic "not to just neutralize their nuclear program, but to sink their navy, destroy their air force and deliver a decisive blow to the Revolutionary Guard, in other words neuter that regime."

He spoke just days before expected nuclear talks will see US and Iranian officials sitting at the same table for discussions on Tehran's nuclear drive. The two countries have lacked diplomatic ties since the Iran hostage crisis of 1979.

World powers led by Washington suspect Iran's uranium enrichment program is aimed at making nuclear weapons, a charge Tehran denies.

US Democratic Senator Mark Udall, who joined Graham during a panel discussion at the forum in Halifax, Nova Scotia, urged continued sanctions against Iran. But he also noted that "every option is on the table," a thinly veiled reference to possible military action.

Israeli Defense Minister Ehud Barak said negotiations were still at "the stage of diplomacy and sanctions."

"It's not clear if this will work at the end," he cautioned.

"Iran is a major threat to any conceivable world order."

The electoral defeat of four Democrats who sat on the powerful US House Armed Services Committee bolsters the Republican's position.

But Democrats may gain surprise support for continued diplomacy from some ultra-conservative Tea Party newcomers to Washington who diverge on foreign policy matters with their Republican brethren.

Various UN resolutions and sanctions have sought to halt Iran's uranium enrichment activities, so far having little effect.

Graham also warned of a forthcoming "period of confrontation" with China over its "cheating" currency manipulation.

US and European lawmakers have called for a stronger Chinese currency as their economies struggle to recover from the global financial crisis. US lawmakers claim the yuan is grossly undervalued and causes global trade imbalances.

Several countries ranging from Japan to Colombia have intervened in recent weeks to make their currencies cheaper in the hope of exporting their way out of the downturn, fueling fears of a global currency war.

Currency tensions boiled over at the recent annual meetings of the International Monetary Fund in Washington, with China rejecting calls for a quick revaluation.

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