The approach would represent a change since US President GeorgeW Bush's first term, when the United States was more wary of such potentially dangerous moves.

``We can now be much more aggressive than we had been,'' a senior official said, hailing the arrival of Condoleezza Rice at the State Department as invigorating the president's push for democracy.

``The guys at the State Department were too afraid to try anything during the first term. They were extremely cautious about angering the regime in Teheran.''

The more aggressive approach is being considered even while Bush moves towards supporting a plan created by France, Germany and Britain to offer Iran economic incentives to forgo nuclear weapons.

Iran contends its nuclear energy program is peaceful, but American and European officials have charged that Teheran may be reserving a nuclear weapons option.

Among the proposals being floated by some inside and outside government are funding activists in Iran who want to start opposition parties and labor unions or people who are able to travel in and out of the country. Also under consideration is increasing funds for pro-democracy broadcasts.

``There are some that want to engage in a more confrontational democratization effort within Iran,'' a State Department official said.

The counter-argument is that giving US funds to reformers may doom them, he said, because they risk being discredited by their association with the nation the Iranian regime calls ``The Great Satan'' and would likely be targeted by the police.

The State Department is looking for ``appropriate opportunities'' to spend money inside and outside Iran, a second official said. Reflecting the debate within the administration, the second official argued that no funds would be spent to directly support political parties or labor unions - something the US rarely, if ever, does.

No organization that identifies itself as an ``opposition'' group can survive inside Iran, the first official said.

Despite disagreements on other aspects of the effort, the US officials involved in the process support funding activists inside Iran as opposed to Iranian exiles. They hope to avoid what many see as the mistake of backing Iraqi exile Ahmad Chalabi, who is believed to have fed US intelligence false information about Iraqi weapons of mass destruction and is now accused of aiding Iran's intelligence services.

The trouble is that Washington lacks good intelligence about internal political forces and individuals. Moreover, the CIA has been reluctant to get involved in covert action in Iran.

More than a decade ago, dozens of CIA informants in Iran were executed or imprisoned after secret communications with the agency were uncovered, CIA officials said recently.

Washington is already spending US$14.7 million (HK$114.66 million) a year to broadcast Persian-language radio and television programs into Iran, and the White House is seeking a sharp increase in such funding.

Republican senator Sam Brownback favors spending some of the US$3 million he added to a recently approved spending bill to promote Iranian ``democracy'' on a conference in the US to bring together Iranian dissidents, rights activists and others to discuss the state of the democracy movement. But some US conservatives support direct funding of Iranian activists.