WASHINGTON - Defending his credibility, President Bush said yesterday that Iran is dangerous and must be squeezed by international pressure despite a blockbuster intelligence finding that Tehran halted its nuclear weapons program four years ago.

Bush said the new conclusion - contradicting earlier U.S. assessments - would not prompt him to take off the table the possibility of pre-emptive military action against Iran. Nor will the United States change its policy of trying to isolate Iran diplomatically and punish it with sanctions, he said.

"Look, Iran was dangerous, Iran is dangerous and Iran will be dangerous if they have the knowledge necessary to make a nuclear weapon," the president told a White House news conference a day after the release of a new national intelligence estimate representing the consensus of all U.S. spy agencies.

On Capitol Hill, congressional Democrats said they hoped the report would have a cooling effect on the administration's rhetoric, which they said was hyped and counterproductive. At a campaign debate in Iowa, seven Democratic presidential candidates stood in agreement that the United States should shift its focus with Iran to diplomatic engagement.

"They should have stopped the saber rattling, should never have started it," said Sen. Barack Obama, D-Ill. New York Sen. Hillary Rodham Clinton said Bush "should seize this opportunity." But she also said it was clear that pressure on Iran has had an effect - a point disputed by rival Sen. Joe Biden of Delaware.

While U.S. intelligence about Iran has changed, Bush showed no inclination to switch course. Iran continues to produce enriched uranium that could be transferred to a secret weapons program, he said.

"So, I view this report as a warning signal that they had the program, they halted the program. And the reason why it's a warning signal is that they could restart it," the president said.

Bush rattled some allies by warning recently that a nuclear-armed Iran could lead to World War III. Until Monday's report, the administration was unwavering in its conviction that Iran was seeking nuclear weapons. Bush said he did not know about the new findings until he was briefed last week - a point challenged by some. *