JERUSALEM (AFP) - Israeli Prime Minister Benjamin Netanyahu said on Tuesday that Iran's atomic drive "will be stopped," a day after a nuclear deal bringing in sanctions relief for Tehran took effect.

"Iran's military nuclear programme must be stopped, and Iran's military nuclear programme will be stopped," Mr Netanyahu told reporters in Jerusalem, without elaborating.

Israel has long warned that a nuclear Iran would pose an existential threat to the Jewish state, and has refused to rule out a military strike to prevent that from happening.

Mr Netanyahu's remarks came a day after he said that the so-called Geneva Agreement "does not prevent" Tehran from pursuing its bid to build military atomic capability.

"A nuclear armed Iran would not just endanger Israel - it would threaten the peace and security of our region," Mr Netanyahu said on Tuesday at a joint news conference with Canadian counterpart Stephen Harper.

"It would give Iran's terrorist proxies a nuclear umbrella.

"It would launch a multilateral nuclear arms race in the Middle East, it could turn the Middle East into a nuclear tinderbox," Mr Netanyahu said.

Iran on Monday halted production of 20 per cent enriched uranium, marking the entry into force of a landmark deal with world powers on its disputed nuclear programme.

After nearly a decade of negotiations between world powers and Iran over its nuclear drive, the two sides reached the interim agreement in Geneva last November.

And the powers kept to their part of the deal, with both the European Union and United States separately announcing they were easing crippling sanctions on Iran.

The West accuses Iran of seeking to produce a nuclear weapon, a charge Tehran denies.

Israel, the Middle East's sole if undeclared nuclear power, vehemently opposed any easing of sanctions, and its criticism of the plan led to a public spat with its US ally.