Israel believes that it will have to deal with a nuclear-armed Iran within a year.

Israeli officials have begun preparing scenarios for the day after a nuclear weapons test. The move is a tacit recognition that Israel is backing away from its long-held position that it would do everything in its power - including mounting a military strike - to stop Iran acquiring nuclear capabilities.

The simulation exercise was conducted in Tel Aviv last week by the Institute for National Security Studies (INSS), a think-tank. Its conclusions suggest that a nuclear test would radically shift the whole power balance of the Middle East. The Israeli specialists assumed that the following would occur:

The U.S. would try to restrain Israel from military retaliation and propose a formal defence pact, including possibly inviting the Jewish state to join NATO; Russia would propose a defence pact with the United States in an effort to stop nuclear proliferation in the Middle East; Saudi Arabia, not content with US nuclear guarantees, would develop its own nuclear arms programme; Egypt would push for military action against Iran while Turkey would be likely to avoid a showdown with Tehran. If Israel were to become a member of NATO, Turkey would withdraw from the organisation.

All the predictions are based on current international policies, The Times reported.