
Sir John Sawers said that covert operations by British spies had prevented the Iranians from developing nuclear weapons as early as 2008.
However, the MI6 chief said it was now likely they would achieve their goal by 2014, making a military strike from the US and Israel increasingly likely.
Sir John gave a secret briefing to the Cabinet in March about Iran's growing military threat but this is the first time his views on the issue have been made public.
It is extremely rare for the head of MI6 to disclose details of operations by the intelligence service.
Sir John made the remarks at a meeting of around 100 senior civil servants in London last week in only his second public speech since he was appointed to the post in 2009.
Speaking at the Civil Service Live event in Olympia he said that Iran was now "two years away" from becoming a "nuclear weapons state".
He said that "when that moment came" Israel or the United States would have to decide whether to launch a military strike.
"The Iranians are determinedly going down a path to master all aspects of nuclear weapons; all the technologies they need," he said. "It's equally clear that Israel and the United States would face huge dangers if Iran were to become a nuclear weapon state."
Sir John said that without MI6's work dealing with the threat, "you'd have Iran as a nuclear weapons state in 2008 rather than still being two years away in 2012."
Sir John said it was up to MI6 to "delay that awful moment when the politicians may have to take a decision between accepting a nuclear-armed Iran or launching a military strike against Iran."
When that moment came, he said: "I think it will be very tough for any prime minister of Israel or president of the United States to accept a nuclear-armed Iran."
Iran has previously accused Israel and the US of trying to disrupt its nuclear programme through covert operations by Mossad, MI6 and the CIA.
Several Iranian nuclear scientists have been apparently assassinated in recent years while a powerful computer virus known as Stuxnet attacked the computer systems of their nuclear facilities.
Britain and America denied the allegations but Israel has remained silent on the issue.
Sir John disclosed that MI6 has "run a series of operations to ensure that the sanctions introduced internationally are implemented, and that we do everything we can within the Middle East to slow down these remaining problems.
"I take great pride in the fact that, in the last ten years, over a number of jobs, I've been involved in an issue of global concern, and I feel that I as an individual [have made] an impact in the outcome of events."
The session - which was open to visitors to the event - was titled "Unclassified chat: Sir John Sawers CMG" and was reported in Civil Service World, a publication which is dedicated to senior Whitehall officials.
Disclosure of his remarks came as the US stepped up their sanctions against front companies suspected of supplying appaernt nuclear materials to Iran after an international oil embargo started earlier this month.
His warning of a nuclear Iran in 2014 could throw the Coalition into turmoil just before the next general election.

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