"Now, more than ever, given Iranian progress, it's important to intensify the economic sanctions and present a credible military option against Iran" to spur it to drop its nuclear programme, Netanyahu told ministers at the start of the weekly cabinet meeting in Jerusalem.
The hawkish leader's remarks came as world powers prepared to meet in Brussels this week to deliberate the possibility of renewing talks with Tehran.
"A month has passed since the Iranian Presidential elections and Iran continues to surge forward quickly toward developing its nuclear military capability," Netanyahu said adding, "Iran is expanding and refining its enrichment process and developing a plutonium reactor at the same time."
He also demanded that Iran must stop all uranium enrichment, remove all enriched materials from within its borders and close the illegal enrichment facility at Qom.
Representatives of the five permanent members of the UN Security Council, plus Germany, will be meeting in Brussels on Tuesday to discuss the possibility of resuming talks on Tehran's nuclear policy set to resume in September.