US President Barack Obama said Friday that Iran's leader should spend more time working to improve the lot of his people than firing off warnings that he will annihilate Israeli cities.

Obama, in Jordan on the latest stop of a Middle East tour, sought to avoid getting into a war of words with Iran's supreme leader Ayatollah Ali Khamenei, but said Iran could transform its future if it stood down its nuclear programme.

If Western sanctions were lifted, Obama said, Iran could build thriving businesses, and expand commerce and travel interactions with the rest of the world, including the United States.

"That should be the vision, not threats to raze Israeli cities to the ground," Obama said.

Obama was asked about Khamenei's broadside at a press conference with King Abdullah II of Jordan.

Khamenei said on Thursday that Iran would an "annihilate" the Israeli cities of Tel Aviv and Haifa if it comes under attack by the Jewish state.

"Every now and then the leaders of the Zionist regime threaten Iran with a military attack," Khamenei said in a live televised speech from the northeastern holy city of Mashhad, referring to Israel.

"They should know that if they commit such a blunder, the Islamic republic will annihilate Tel Aviv and Haifa," he said.

Iran is said to possess ballistic missiles capable of reaching Israel. It also has close relations with Israel's foes in the region, including Lebanon's Hezbollah and Palestinian militants in the Islamist-ruled Gaza Strip.

Israel, widely believed to be the Middle East's sole but undeclared nuclear power, suspects that Tehran is seeking atomic arms, a fear shared by the United States and Western powers, and has not ruled out a military strike.

Iran insists its nuclear programme is for purely civilian purposes.

Obama has repeatedly stressed during a tour of the Middle East this week that Washington has also refused to rule out the military option, but says he prefers a diplomatic solution to the nuclear stand-off.