While calling the emerging deal a bad one, he said the choice was not only between a bad deal or war.
"There is a third alternative -- standing firm, increasing the pressure on Iran until a good deal is achieved," he said in a statement.
And "Israel demands that any final agreement with Iran will include a clear and unambiguous Iranian recognition of Israel's right to exist."
His comments followed a special session of his powerful security cabinet in the wake of yesterday's framework agreement between the Islamic republic and world powers, hammered out at marathon talks in Switzerland.
"The cabinet is united in strongly opposing the proposed deal," he said.
"This deal would pose a grave danger to the region and to the world and would threaten the very survival of the state of Israel."
"The deal would lift sanctions almost immediately and this at the very time that Iran is stepping up its aggression and terror in the region and beyond the region."
"Such a deal paves Iran's path to the bomb," he added.
"And it might very well spark a nuclear arms race throughout the Middle East and it would greatly increase the risks of terrible war."
Israel is the Middle East's sole, albeit unacknowledged, nuclear power.
Repeating previous Israeli warnings, Intelligence Minister Yuval Steinitz said yesterday that all options were open.
"If we have no choice, we have no choice... The military option is on the table," he said.
Israel has been the loudest opponent of reaching a deal that would leave Iran with atomic capabilities.
Shortly after the outline of the deal was revealed, Israeli officials criticised it as "a historic mistake which will make the world far more dangerous".
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