Israeli Deputy Prime Minister Shaul Mofaz has warned that Iran is near a breakthrough in its nuclear programme, reported BBC.
Mr Mofaz accused Iran of pursuing a strategy of buying time in talks aimed at limiting its nuclear ambitions.
The EU and the US have offered Iran a series of incentives to persuade Tehran to stop uranium enrichment or face further sanctions if it does not.
Iran has said it is not yet prepared to give a response to the offer, which expires this weekend.
Mr Mofaz, speaking on a visit to Washington, said that it was "unacceptable" for Iran to become a nuclear power.
"Our estimation is that already by (2009) Iran will reach enrichment capability and as soon as 2010 will have option to reach (uranium production) at military levels," he said, according to the AFP news agency.
"It's a race against time and time is winning," the Israeli minister added.
Iran had been set a deadline of this weekend to respond to a proposal from the five permanent members of the UN Security Council and Germany to suspend uranium enrichment.
The Security Council has already imposed three sets of sanctions, and a fourth could follow if the current offer is rejected by Tehran.
But, says the BBC's Jon Leyne, setting Iran a deadline always threatened to be counter-productive, especially when there was no immediate penalty for not complying.
Iran has said it will offer its own ideas in its own time - perhaps in the next two weeks.
For their part, the European Union and the United States, who are co-operating on this initiative, have been giving mixed messages on how precisely and how seriously they view the deadline, our correspondent notes.