U.S. President Barack Obama's administration said on Wednesday that progress toward Middle East peace would help thwart Iran's ambitions by preventing it from "cynically" using the conflict to divert attention from its nuclear program.

Drawing an explicit link between Israeli-Palestinian peace efforts and Washington's drive to isolate Iran, Obama's national security adviser, Jim Jones, urged bold steps to revive long-stalled Middle East negotiations.

U.S. officials hope that shared Arab-Israeli concerns about Iran can be exploited to spur old foes to help advance Israeli-Palestinian peace and restrain Tehran's nuclear activities and rising influence in the region.

Jones coupled an appeal to Israel and its Arab neighbors to take risks for peace with a warning to Iran that it would face "real consequences" for its nuclear defiance. Obama is leading a push to tighten UN sanctions on Tehran.

"One of the ways that Iran exerts influence in the Middle East is by exploiting the ongoing Arab-Israeli conflict," Jones told the Washington Institute for Near East Policy.

"Advancing this peace would ... help prevent Iran from cynically shifting attention away from its failures to meet its obligations," he said.

The Israeli government, locked in a dispute with the United States over Jewish settlement policy, has made clear it sees confronting Iran as more of a security priority for Washington, and Middle East peace should be handled on a separate track.

Jones - while voicing disappointment over the failure to jumpstart U.S.-sponsored indirect peace talks - insisted progress toward peace is a U.S. interest as well.

That seemed to echo Obama's assertion last week that a two-state solution to the decades-old conflict was "a vital national security interest", adding to speculation that he was considering his own broad peace proposal.