(Adds fresh quotes, details) By Paul Hughes LONDON, Feb 5 (Reuters) - Military action against Iran would have disastrous consequences, according to a report released on Monday by a coalition of British-based think-tanks, faith groups and others who urge a new diplomatic push to avert conflict. The United States and Israel have stepped up their rhetoric against Tehran in recent weeks, prompting speculation they could be preparing for military attacks on the Islamic state. Washington has sent a second aircraft carrier to the Gulf, a move seen as a warning to Iran, which the United States accuses of seeking atomic arms and fuelling instability in Iraq and elsewhere in the Middle East. Iran denies the charges. The joint report by 17 organisations, including the Foreign Policy Centre, Oxfam and the Muslim Council of Britain, said an attack on Iran would, strengthen Iran's atomic ambitions, severely undermine hopes for stability in Iraq and damage global economic growth through higher oil prices. "Our message today is simple," said Alex Bingham, Iran analyst at the Foreign Policy Centre. "Despite the belligerence, despite the tension, there is still time to talk to Iran." European diplomats said on Monday Iran had installed 328 uranium enrichment centrifuges, in defiance of U.N. Security Council resolutions demanding it halt such work. Iran says its nuclear programme will only be for peaceful puposes, such as electricity generation, and not to make bombs. THREAT "NOT IMMINENT" The report received support from Sir Richard Dalton, Britain's ambassador to Tehran from 2002 to 2006, who said negotiation offered the best chance of ensuring Iran did not develop nuclear arms. "Military action ... is not only unlikely to work but would be a disaster for Iran, the region and quite possibly the world," he said. "We're not in the position of facing a clear and imminent threat now." Among the unintended consequences of an attack on Iran, the report said, would be to bolster the position of hardliners in Iran. It could also inspire terrorist attacks in Western countries. The report's recommendations included removing or finding a compromise on preconditions to talks, such as the insistence Iran suspend uranium enrichment; seeking direct talks between Iran and the United States; and developing a "grand bargain" package of incentives made by major world powers to Iran last June in return for its suspension of sensitive nuclear work. Dalton said there were signs that Iran's leadership was beginning to re-evaluate the costs and benefits of its confrontational stance against the West. "The international community has leverage on Iran and should use it," he said, suggesting the European Union could contemplate imposing its own sanctions on Tehran. "They are extremely difficult to negotiate with ... but it should be possible to put an offer to them which they find very difficult to refuse," he added.
