A new national intelligence estimate on Iran concluded, in contrast to two years ago, that Tehran had halted its nuclear weapons programme in 2003, prompting a conciliatory message from the White House.
"The estimate offers grounds for hope that the problem can be solved diplomatically, without the use of force, as the administration has been trying to do," said Stephen Hadley, the national security adviser.
Hadley said the latest finding suggested that George Bush had the right strategy - intensified international pressure with a willingness to negotiate a solution that serves the interests of Tehran while ensuring that the world will never have to face a nuclear-armed Iran.
The Bush administration is leading efforts to tighten UN sanctions against Iran after its refusal to halt uranium enrichment despite two previous rounds of sanctions.
Javier Solana, the EU foreign policy chief, last week expressed disappointment at the lack of progress in talks held in London with Iran's top nuclear negotiator, Saeed Jalili.
"Tehran's decision to halt its nuclear weapons programme suggests it is less determined to develop nuclear weapons than we have been judging since 2005," stated the unclassified summary of the secret report.
However, the report said Iran's decision to continue with its uranium enrichment programme means it may still be able to develop a weapon between 2010 and 2015.
Iran's decision to halt active weapons development was the key finding of the latest intelligence estimate on the country's nuclear programme. National intelligence estimates represent the most authoritative written judgments of all 16 US spy agencies.
Mike McConnell, the director of national intelligence, decided last month that the key judgments of NIEs should not, as a rule, be declassified and released.
But intelligence officials said an exception was made in this case because the last assessment of Iran's nuclear programme in 2005 has been influential in public debate about US policy toward Iran and needed to be updated to reflect the latest findings.
To develop a nuclear weapon Iran needs a warhead design, a certain amount of fissile material, and a delivery vehicle such as a missile. The intelligence agencies now believe Iran halted design work four years ago and as of mid-2007 had not restarted it.
But Iran's uranium enrichment programme for its civilian nuclear reactors leaves open the possibility that fissile material could be diverted to covert nuclear sites to produce enough highly enriched uranium to make a bomb.
Iran would not be capable of technically producing and reprocessing enough plutonium for a weapon before about 2015, the report states, pushing back any need to use force well past the end of the Bush administration.
But ultimately Iran has the technical and industrial capacity to build a bomb "if it decides to do so", the intelligence agencies found.
Hadley said of current US strategy: "The bottom line is this: for that strategy to succeed, the international community has to turn up the pressure on Iran with diplomatic isolation, United Nations sanctions, and with other financial pressure and Iran has to decide it wants to negotiate a solution."