NEOCONSERVATIVES in Washington are urging President George W Bush to drop diplomacy with Iran in favour of boosting internal dissent and opposition forces within the Islamic regime.

In an open breach with White House policy, they argue the multilateral diplomacy pursued by Condoleezza Rice, the secretary of state, is encouraging the Iranians to snub the International Atomic Energy Agency (IAEA) and develop a nuclear bomb under cover of a peaceful energy programme.

Michael Rubin, a Middle East expert at the neoconservative American Enterprise Institute in Washington, said: “The United States doesn’t have a policy on Iran. We should be looking for a way to address the people of the country.”

Rubin accused Rice of being tepid in her support for democratic reform and internal regime change. “I don’t believe Rice has ever put her neck out for freedom when the Soviet Union was dissolving or now,” he said.

Foreign policy hawks believe America should be assisting democratic forces inside Iran, much as President Ronald Reagan did with the trade union organisation Solidarity in Poland in the early 1980s.

Robert Kagan, a leading neoconservative who helped to make the case for the invasion of Iraq, accused the Bush government of doing little “to exploit the evident weaknesses in the regime”.

The Wall Street Journal argued last week that “neorealists” such as Rice, who support diplomacy as the best way to project American power and interests, were consolidating their grip.

Rice helped to broker the agreement in London by recommending that Iran be reported by the IAEA to the United Nations security council for breaching the nuclear nonproliferation treaty, although it is unlikely to lead in the first instance to tough economic sanctions.

In response Iran’s president, Mahmoud Ahmadinejad, has told the IAEA to remove the seals and surveillance cameras at its nuclear development sites. Yesterday, in what could mark a further escalation in the crisis, he warned Iran might withdraw from the treaty.

Few foreign policy hawks believe the Iranian regime should be overthrown by force but they argue it could collapse from within.

There are signs of labour unrest in Iran. Mansoor Oslanloo, leader of a bus workers’ union, has been in prison since December last year and hundreds of union members have been arrested, prompting a wave of protests in Tehran.

The US state department spends roughly $4m (£2.3m) a year on the promotion of democracy and women’s rights in Iran — too little to make a difference, according to critics. A campaign for human rights and democracy in Iran is to be launched in the US Congress on March 2.

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