Days after a published report that U.S. special forces are already conducting covert military operations in Iran, Tehran and Washington are in a growing war of words over the middle eastern nation's disputed nuclear capability.

In an article published in Sunday's New Yorker magazine, American journalist Seymour Hersh reports that U.S. commandos are already operating in Iran.

"The American task force, aided by the information from Pakistan, has been penetrating eastern Iran from Afghanistan in a hunt for underground installations," he wrote in the article outlining the U.S. President George Bush's second-term security priorities.

Keen to avoid the embarrassment that followed the Americans' inability to locate supposed weapons of mass destruction in Iraq, Hersh says the covert missions in Iran -- and as many as nine other nations throughout Asia and the Middle East -- are paving the way for future attacks.

In response, the Pentagon said his article was plagued by fundamental mistakes.

The New Yorker article was "so riddled with errors of fundamental fact that the credibility of his entire piece is destroyed," Pentagon spokesperson Lawrence DiRita told reporters on Monday.

D.C., Tehran trade barbs

In his 2002 State of the Union address, U.S. President George W. Bush listed Iran as one of the so-called "axis of evil" alongside North Korea and pre-war Iraq. And on Monday, in an interview with NBC News, Bush said he can't rule out military action if Tehran doesn't come entirely clean on the extent of its disputed nuclear capacity.

"I hope we can solve it diplomatically, but I will never take any option off the table," Bush said.

Washington followed its ramped-up rhetoric on Tuesday, with word of U.S. sanctions against nine companies from China, Taiwan and North Korea.

A State Department notice published in the latest issue of the U.S. Federal Register said the companies are being subject to a two-year embargo for transferring "equipment and technology controlled under multilateral export control lists" to Iran.

The same day, Russia spoke up in Tehran's defense -- with Russian Foreign Minister Sergei Lavrov dismissing concerns that Iran was using its nuclear know-how to do anything other than develop energy-producing capabilities.

"I have no grounds to believe that the situation will get out of control and that the peaceful nature of Iran's nuclear programme will be changed," he told the Interfax news agency.

"Russia and Iran have a specific dialogue going on to make sure Iran's nuclear programme stays entirely peaceful and raises no questions," he said.

Iranian Defense Minister Ali Shamkhani told the Mehr news agency that he is unmoved by the American threat of force.

"We are able to say that we have strength such that no country can attack us because they do not have precise information about our military capabilities due to our ability to implement flexible strategies," Shamkhani was quoted saying Tuesday.

"We can claim that we have rapidly produced equipment that has resulted in the greatest deterrent," he added, without clarification.

At the heart of the dispute is Iran's refusal to completely dismantle its nuclear program. While the U.S. holds firm its conviction Tehran is secretly developing a nuclear weapons capability, Iran and its allies maintain the program is entirely peaceful.

The United Nations' nuclear watchdog, the International Atomic Energy Agency, is currently investigating U.S. claims that covert nuclear programs discovered in Iran more than two years ago were aimed at producing weapons, not energy.

So far, IAEA chief inspector Mohamed ElBaradei has refused to declare Iran in breach of international nuclear nonproliferation treaties.

Iran has consistently denied having nuclear weapons, but did announce last October that it had conducted successful tests of its Shahab-3 ballistic missile, which is capable of launching a warhead more than 2,000 kilometres.