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The United States on Thursday refused to rule out military action against Iraq, saying Baghdad had "made a mistake" by turning away two American members of a U.N. weapons-inspection team.

State Department spokesman James Rubin, when asked whether a military response to the Iraqi action was a possibility, said: "This is a very serious matter, and we are not ruling any option out at this time."

Iraq, which announced Wednesday that it would bar U.S. members of UNSCOM, a U.N. commission overseeing demolition of Iraq's weapons of mass destruction, turned back two American members of an UNSCOM team that flew in from Bahrain on Thursday.

"Iraq has made the mistake of trying to interfere with the business of the United Nations special commission," Rubin told a news briefing. "This is not an attack on the United States personnel. This is an attack on the very fundamentals of the U.N. system."

American U.N. envoy Bill Richardson called Iraq's action "very disturbing."

The U.S. refusal to rule out military action followed similar statements by Britain and France. The three countries spearheaded a coalition that drove Iraqi invasion forces out of Kuwait in the 1991 Persian Gulf war.

Pentagon spokesman Ken Bacon refused to discuss the use of military force. "This, right now, is a dispute between Iraq and the U.N., and the Security Council is figuring out how to respond to it. We are working with the Security Council," he said.

The Security Council, which on Wednesday warned Iraq of "serious consequences" if it did not back down, is expected to discuss Iraq again this afternoon when Australian Richard Butler, the head of UNSCOM, may report to the 15-member body.

Rubin said he believed that all Security Council members, including Russia, were making clear to Iraq that its attempt to discriminate between U.S. and other UNSCOM members was unacceptable.

Despite the implied threat of military force, Rubin indicated that Washington hoped that diplomacy would resolve the issue.

But Iraq remained defiant, saying that it would not retreat and that it did not fear the use of force against it.

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