Israeli Prime Minister Benjamin Netanyahu on Tuesday accused Iran of breaching the nuclear deal in order to "blackmail" the international community into relieving economic pressure on the Islamic republic.

"This week Iran openly violated the nuclear deal by increasing the stockpile of enriched uranium (to beyond that) allowed under the deal," Netanyahu said at an early reception in Jerusalem marking the United States' July 4 independence day.

Iran said Monday it had exceeded a limit on its enriched uranium reserves set under a 2015 nuclear deal that has edged towards collapse.

"They're hoping, that regime, that by violating the deal it will be able to blackmail the world into making concessions and reducing the economic pressure on it," Netanyahu said.  

"We should do the exact opposite. Now is the time to increase the pressure. Now is the time to stand firm," he added.

Israel has long threatened to take preemptive military action to deny Iran the means of making nuclear weapons. Tehran says it has no such designs. One of its senior lawmakers warned on Monday that Israel would be destroyed within “only half an hour” should the United States attack Iran.

On Tuesday, Israel Foreign Minister Israel Katz said Israel is preparing for its possible military involvement in any escalation in the Gulf confrontation between Iran and the United States.

Katz told an international security forum that Iran might accidentally stumble out of what he termed the "gray zone" of contained confrontation.

"It should be taken into account that mistaken calculations by the (Iranian) regime...are liable to bring about a shift from the 'gray zone' to the 'red zone' - that is, a military conflagration," he said in a speech to the Herzliya Conference.

"We must be prepared for this, and thus the State of Israel continues to devote itself to building up its military might for the event that it will have to respond to escalation scenarios."

Iran's move has been seen as a way of exerting pressure on Europe to try and salvage the deal which has hung by a thread since US President Donald Trump last year withdrew from the accord and re-imposed biting sanctions on Tehran.

The diplomatic chiefs of the EU, France, Germany and Britain said on Tuesday they were "extremely concerned" and urged Iran to reverse its decision to breach a limit on enriched uranium reserves under a 2015 nuclear deal.

"We urge Iran to reverse this step and to refrain from further measures that undermine the nuclear deal," said the joint statement signed by EU diplomatic chief Federica Mogherini and the three countries' foreign ministers – France's Jean-Yves Le Drian, Germany's Heiko Maas and Britain's Jeremy Hunt.  

"We regret this decision by Iran, which calls into question an essential instrument of nuclear nonproliferation."

It added that the group was "urgently considering next steps under the terms" of the deal, which saw Iran commit to never acquiring an atomic bomb, accept drastic limits on its nuclear program and submit to IAEA inspections in exchange for a partial lifting of international sanctions.

(Cover: Israeli Prime Minister Benjamin Netanyahu (C) speaks with Government Secretary Tzachi Braverman during the weekly cabinet meeting at his office in Jerusalem on July 23, 2017. /VCG Photo)

(With inputs from Reuters and AFP)