JERUSALEM  - Isolated and angry with its ally the United States, Israel Sunday bitterly denounced a "bad" nuclear deal between world powers and Tehran while repeating its threat of military action against Iran.

The hostile reaction came as the Jewish state saw months of diplomatic efforts to persuade world powers not to provide sanctions relief to Tehran being swept aside.

Hours after Iran agreed with the P5+1 group - the United States, China, Russia, France, Britain and Germany - to row back some of its nuclear activities in exchange for limited sanctions relief, Prime Minister Benjamin Netanyahu charged that "what was achieved in Geneva is not a historic agreement but rather a historic mistake".

Netanyahu's office had earlier called it a "bad agreement" that "gives Iran exactly what it wanted - a significant easing of sanctions and allows it to keep hold of the most essential parts of its nuclear programme."

Since the election of Iran's new President Hassan Rouhani, whose diplomatic overtures to the West allowed a resumption of dialogue with long-time enemy the United States, Netanyahu repeatedly warned that Tehran's intentions had not changed.

Israel and the West suspect the nuclear programme is aimed at developing a weapons capability but Tehran insists it is entirely peaceful.

The Israeli premier had called Rouhani a "wolf in sheep's clothing" and repeatedly warned world powers against striking a "bad and dangerous" deal with the Islamic republic, saying it could result in war.

Netanyahu reiterated Israel reserved the right to defend itself through military action, telling the UN Security Council in October that his country was ready to order a strike to prevent Iran gaining nuclear weapons capability.

And on Sunday, Israel's hawkish Foreign Minister Avigdor Lieberman stressed that "all options are on the table".

"The responsibility for the security of the Jewish people and the population of Israel remains the sole responsibility of the Israeli government," he told public radio.

Experts, however, were sceptical that Israel would imminently take such action.

"It's not a great deal, but it's not a disaster either," said Dr Emily Landau of Tel Aviv University's Institute for National Security Studies.

"In terms of (US President Barack) Obama's project of putting time on the clock and not allowing the Iranians to move forward with their nuclear programme during the months of negotiations, the deal is more or less something that can be lived with (for the Israelis)," Landau told AFP.

"As long as the international community is moving into this six-month period where there's supposed to be a negotiated comprehensive deal, it's hard to believe Israel would take action."

Israel's President Shimon Peres was more cautious in his response, pointing to the fact the agreement was "an interim deal" which allowed time for a diplomatic solution. In a statement, however, he did not rule out a military response.

"Reject terrorism," Peres pleaded with the Iranian people. "Stop the nuclear programme. Stop the development of long-range missiles. Israel like others in the international community prefers a diplomatic solution.

"But ... if the diplomatic path fails, the nuclear option will be prevented by other means," Peres warned.

US Secretary of State John Kerry sought to assuage Israel, insisting the deal was a "first step."

"This first step, I want to emphasise, actually rolls back the programme from where it is today, enlarges the breakout time, which would not have occurred unless this agreement existed.

"It will make our partners in the region safer. It will make our ally Israel safer," Kerry told reporters.

The Geneva deal came just days after Netanyahu, in an apparent snub to the US and a last-ditch effort, travelled to Moscow to try to convince Russian President Vladimir Putin not to enter a deal with Iran.

That trip lived up to predictions by analysts that it would achieve little.