Gates also said new intelligence estimates indicated Iran's long-range intercontinental effort was advancing at a slower pace than earlier estimates.

In shelving the long-range plans, the Obama administration had to demonstrate that the decision did not reflect a lack of commitment to the defence of Poland and the Czech Republic and NATO collectively.

'We will continue to work cooperatively with our close friends and allies, the Czech Republic and Poland, who had agreed to host elements of the previous programme,' Obama said. 'I've spoken to the prime ministers of both the Czech Republic and Poland about this decision and reaffirmed our deep and close ties.'

Obama also said the decision was not connected to Russia's 'unfounded' concerns that the long-range system posed a threat to its security and urged Moscow to work with NATO to develop missile-defence capabilities.

'We've also repeatedly made clear to Russia that its concerns about our previous missile defense programs were entirely unfounded,' he said. 'Our clear and consistent focus has been the threat posed by Iran's ballistic missile program and that continues to be our focus and the basis of the program that we're announcing today.'

Gates said the new plans call for the deployment of SM-3 interceptor missiles in southern and northern Europe to fend off any Iranian attack. The SM-3s will initially be deployed on the Navy's Aegis ships with plans to install them on land by 2015, Gates said.

The US has begun negotiations with Poland and the Czech Republic to host SM-3 and related sites, Gates said.

'These capabilities offer a variety of options to detect, track and shoot down enemy missiles,' Gates said.

The sea-based Aegis system, like other medium-and short-range systems, has proven much more capable and cost efficient, while critics of the long-range system point to its technological shortcomings and high costs.