President Donald Trump approved military strikes against Iran in retaliation for downing a US surveillance drone but pulled back from launching them Thursday night (local time) after a day of escalating tensions.

As late as 7 pm Thursday, military and diplomatic officials were expecting a strike, after intense discussions and debate at the White House among the president’s top national security officials and congressional leaders, according to multiple senior administration officials involved in or briefed on the deliberations.

Officials said the president had initially approved attacks on a handful of Iranian targets, like radar and missile batteries.

The operation was in its early stages when it was called off, a senior administration official said, but no missiles had been fired.

It was not clear whether Mr Trump simply changed his mind or whether the administration altered course because of logistics or strategy.

It was also not clear whether the attacks might still go forward.

The White House declined to comment, as did Pentagon officials.

The Triton unmanned aircraft is designed to fly surveillance missions up to 24-hours at high altitudes. Photo: AAP

The retaliation plan was intended as a response to the shooting down of the unmanned, $130 million ($173 million) surveillance drone, which was struck Thursday morning by an Iranian surface-to-air missile, according to a senior administration official.

The strike was set to take place just before dawn Friday in Iran to minimize risk to the Iranian military or to civilians.

But military officials received word a short time later that the strike was off, at least temporarily.

Senior administration officials said Secretary of State Mike Pompeo, national security adviser John Bolton and CIA Director Gina Haspel had favoured a military response.

But top Pentagon officials cautioned that such an action could result in a spiralling escalation with risks for US forces in the region.

Congressional leaders were briefed by administration officials in the Situation Room.

This map provided by the US Department of Defence shows the site where they say a US Navy RQ-4 drone was shot down flying over the Gulf of Oman and the Strait of Hormuz on a surveillance mission in international airspace.

On Thursday, Mr Trump insisted that the United States’ unmanned surveillance aircraft was flying over international waters when it was taken down by an Iranian missile.

“This drone was in international waters, clearly,” the president told reporters on Thursday afternoon.

Iran’s government insisted that the drone had strayed into Iranian airspace, releasing GPS coordinates that put the drone 12 kilometres off the country’s coast – inside the 12 nautical miles from the shore that Iran claims as its territorial waters.

Majid Takht-Ravanchi, Iran’s ambassador to the United Nations, said Tehran “does not seek war” but “is determined to vigorously defend its land, sea and air.”

-New York Times