The issue was expected to be the focus of a meeting later Monday at the White House between Obama and visiting Israeli Prime Minister Benjamin Netanyahu.
The two allies, along with most of the international community, believe Iran is trying to develop nuclear weapons - a charge Iran denies. In recent months, differences have emerged in how to respond. The US says tough new economic sanctions set to take effect this summer must be given time to work.
Israel, while welcoming the sanctions, says time is running out, and military action must be strongly considered. Israel has stopped short of publicly threatening Iran with an attack, leading many to believe that hints of a military strike are another form of pressure on Iran.
Iran has threatened to retaliate for military action and stiff sanctions alike.
Israel considers a nuclear-armed Iran to be an existential threat, citing Iran's support for militant groups, its calls for Israel's destruction and its development of missiles capable of striking anywhere in the Jewish state.
Israel has grown increasingly concerned since the UN nuclear agency determined that Iran continues to enrich uranium - a key component in bomb making - and is moving its enrichment facilities deep underground to protect them from attack.
In a high-profile speech to the pro-Israel lobby group AIPAC on Sunday, Obama tried to soothe Israeli concerns by saying he would not hesitate to use force against Iran if necessary.
While stressing he hopes to resolve the issue diplomatically, Obama said, "Iran's leaders should have no doubt about the resolve of the United States."
"Iran's leaders should know that I do not have a policy of containment; I have a policy to prevent Iran from obtaining a nuclear weapon. And as I've made clear time and again during the course of my presidency, I will not hesitate to use force when it is necessary to defend the United States and its interests," Obama said.
At the same time, he appeared to caution against a unilateral Israeli strike. He said "loose talk of war" has caused tensions to rise, and emphasized that "now is the time to let our increased pressure sink in."
Obama's tough language won praise in Israel as an unprecedented show of support for the Jewish state.
"We've never heard such a supportive speech in Israel," Deputy Prime Minister Silvan Shalom told Israel Radio Monday, adding that US-Israel coordination was now "almost perfect."
Shalom, a hawkish member of Netanyahu's government, has in the past expressed doubt that Iran would abandon its nuclear program on its own.
Israeli President Shimon Peres, who had a meeting with Obama Sunday, said he "came out with the feeling that the man is determined to prevent Iran from attaining nuclear weapons."
It remained unclear, however, whether Netanyahu would be persuaded. Just ahead of Obama's speech on Sunday, Israeli Foreign Minister Avigdor Lieberman said Israel would determine how to cope with the Iranian threat based on its own interests, not US pressure.
Reacting to Obama's speech, Netanyahu gave few indications, saying that "more than everything, I value his statement that Israel must be able to protect itself from all threats."
Amos Yadlin, former head of Israel's military intelligence, sharply criticized Obama's speech to AIPAC, saying he put forth "misleading messages."
"You can't say all the options are on the table, and broadcast the opposite message that we are concerned about a military option," Yadlin told Israel Radio on Monday.
The US insists that Iran has not yet made the final decision to actually make a bomb. Israel believes the signs are clear, and that a "red line" will be crossed once Iran completes the task of moving its enrichment facilities out of the range of attack.
Eytan Gilboa, an expert on US-Israel relations at Bar Ilan University outside Tel Aviv, said Obama's speech "absolutely" would make it more difficult for Israel to act alone. But he said the speech would not be enough to satisfy Netanyahu.