By Dan De Luce
"What is clear is if the engagement process is not successful, the United States is prepared to press for significant additional sanctions that would be non-incremental," Gates said in the Jordanian capital on a Middle East tour.
He added that in such an event Washington would "try to get international support for a much tougher position."
Iran is already subject to three sets of UN sanctions following its refusal to heed repeated ultimatums from the Security Council to halt sensitive nuclear work.
Gates said Washington's preferred option remained a negotiated resolution of Western suspicions that Iran's civilian nuclear programme is cover for a weapons drive, something that Tehran strongly denies.
"Our hope still remains that Iran will respond to the president's outstretched hand in a positive way but we will see," he said.
Gates arrived in Jordan from Israel whose new leader Prime Minister Benjamin Netanyahu has made plain he regards Iran's nuclear and ballistic missile programmes as the biggest threat in his country's 60-year history.
He said Netanyahu indicated Israel was willing to wait to see the results of US diplomacy towards Iran, as long as the approach was not open-ended.
"I have every sense the Israeli government is prepared to let our strategy play out" through a combination of diplomacy and economic pressure," he said.
At a news conference in Jerusalem earlier with his Israeli counterpart Ehud Barak, Gates said Washington is hoping for a response from Tehran by September to overtures on its nuclear drive.
"The president is certainly anticipating or hoping for some kind of a response this fall, perhaps by the time of the UN General Assembly (in September)," Gates said.
In Brussels, EU foreign policy chief Javier Solana warned that the current political turmoil in Iran meant it was unlikely talks on the nuclear programme would start up again soon.
The six major powers involved in the talks — the five veto-wielding permanent members of the UN Security Council plus Germany — called in April for a resumption of nuclear negotiations with Iran, which had stalled in September.
But Solana said: "I don't think at this time there is going to be a reply to the offer made late April.
"I don't expect a response rapidly, I don't see it until the situation settles," he said.
In April, President Mahmoud Ahmadinejad announced that Iran would present a new package to the world powers in a bid to solve various contentious issues, including its sensitive nuclear work.
Iran reiterated on Monday it has no plans to build nuclear weapons and said it was still preparing the package.
"We are a signatory to the Non-Proliferation Treaty and it is our right to have peaceful nuclear activities. Nuclear weapons have no place in our defence structure," foreign ministry spokesman Hassan Ghashghavi told reporters.
Iran has been in crisis since Ahmadinejad's bitterly disputed re-election in a June 12 poll triggered the worst unrest since the 1979 Islamic revolution.
On Monday, US President Barack Obama appealed to fellow Security Council permanent member China to work with the United States on resolving concerns over Iran's nuclear programme.
"Make no mistake: the more nations acquire these weapons, the more likely it is that they will be used," he said at the opening of a two-day US-China forum.
He said the United States and China needed to "be united in preventing Iran from acquiring a nuclear weapon and urging the Islamic republic to live up to its international obligations."
During Gates's talks in Jerusalem, Israel made clear its own intense concern over Iranian ambitions.
"Israel remains in its basic position that no options should be removed from the table, despite the fact that at this stage a priority should be given still to diplomacy and sanctions," the Israeli defence minister said.
Israel has the Middle East's sole if undeclared nuclear arsenal but Prime Minister Netanyahu has said that any move by Iran to match it would be the greatest threat to the Jewish state in its 60-year history.
