LONDON (Reuters) - Israel is involved in a covert war of sabotage inside Iran to try to delay Tehran's alleged attempts to develop a nuclear weapon, a British newspaper said on Tuesday, quoting a former CIA agent and intelligence experts.

An intelligence source in the Middle East told Reuters last year Israel planned to target Iranian nuclear scientists with letter bombs and poisoned packages and had set off explosions in Iran. Analysts offered similar accounts and said such tactics would be credible, but no confirmation has been available.

Some analysts caution that reports of such a dirty war may form part of a psychological warfare campaign to unsettle Iran.

The intelligence source told Reuters that Israeli agents were working with Western governments and firms doing business with Tehran, whose Islamist leadership is a sworn enemy of Israel but denies accusations its nuclear program has a military purpose.

Israel's government, widely assumed to be the only nuclear power in the Middle East, declines all comment on such reports.

Israel has launched a covert war against Iran as an alternative to direct military strikes against Tehran's nuclear program, Britain's Daily Telegraph said on Tuesday. It is using hitmen, sabotage, front companies and double agents to disrupt the regime's illicit weapons project, the experts say.

Quoting intelligence experts and an unnamed former CIA agent, the newspaper said Israel's decapitation strategy had targeted members of Iran's atomic program, hoping to set back the country's nuclear ambitions without resorting to war.

SABOTAGE GOING ON

Meir Javendafar, an Iran expert at Meepas, a Middle East analysis group, told Reuters there were also reports Iran was being sold faulty equipment for its nuclear program, and that there were attempts to disrupt the electricity supply to Natanz, a uranium enrichment facility in central Iran.

I think there is sabotage going on. It's a logical move and it makes sense in the game that is part of the overall struggle to disrupt Iran's nuclear ambitions, he said.

As evidence of Israel's reported strategy, Iran watchers have pointed to events such as the death of Ardeshire Hassanpour, a nuclear scientist at the Isfahan uranium plant who died at home from apparent gas poisoning in 2007.

The former CIA agent told the Telegraph: Disruption is designed to slow progress on the program, done in such a way they don't realize what's happening. The goal is delay, delay, delay until you can come up with some other solution.

It's a good policy, short of taking them out militarily, which probably carries unacceptable risks.

Asked about the newspaper report, Mark Regev, a spokesman for Israeli Prime Minister Ehud Olmert, told Reuters: It is not our practice to comment publicly about these sorts of allegations, not in this situation, not in any situation.

New U.S. President Barack Obama has taken a more diplomatic line with Tehran, quietening former Bush administration talk of a possible military strike against Iranian nuclear assets.

Israeli leaders have been careful not to rule out their military options, though analysts question how far a new Israeli government, still to be formed after last week's parliamentary election, will be prepared to act without Washington's backing.

Javendafar said there were indications several states were attempting to infiltrate Iran to disrupt nuclear development but also suggested much of the reported clandestine activity was more part of a psychological war than an actual one of sabotage.

Numerous intelligence agencies are trying their best to do this. Not just Israel, but the Americans and many European spy agencies, he said. If it's true, then it's putting pressure on the Iranian program technically.

Even if there's no truth to it, it's part of what is a massive psychological war against Iran's nuclear program ... It's ... much more affordable than sabotaging equipment.

(Editing by Janet McBride)

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