'Talks, not war'
The report, compiled by groups including aid agency Oxfam, the Foreign Policy Centre think-tank and trade union GMB, says that the threat of military strike should not be used as a negotating tool.
"The possible consequence of military action could be so serious that governments have a responsibility to ensure that all diplomatic options have been exhausted. At present, this is not the case," the report said.
The report's anti-war stand was similar to the opinion voiced a day earlier by three former senior US military officials against military action.
In a letter to the British Sunday Times newspaper, retired army lieutenant general Robert Gard, retired US Marine Corps general Joseph Hoar, and retired Navy vice-admiral Jack Shanahan, argued that the current crisis must be resolved through diplomacy.
The United States and some of its western allies, including the United Kingdom, accuse Tehran of seeking to secretly develop nuclear weapons.
Tehran, however, insists its atomic programme is solely for the purpose of producing civilian nuclear energy.
The stand-off has worsened with Washington accusing Tehran of sponsoring violence against US-led forces in neighouring Iraq.
Releasing the report, Stephen Twigg, director of the Foreign Policy Centre, said: "The consequences of military action against Iran are not only unpalatable, they are unthinkable."
The report said: "It is expected if military action were undertaken it could deepen the resolve of the Iranian regime to become a nuclear power and would likely lead to Iran's withdrawal from the Non-Proliferation Treaty.
"The threat of Iran building a nuclear weapon could intensify, possibly prompting further proliferation in the region"."
It also argues: "Iran's links with Hezbollah in Lebanon, Hamas in the West Bank and Gaza as well as Shia constituencies in Iraq, Afghanistan and Gulf states make regional retaliation against any military attack on Iran likely.
"An attack on Iran would be perceived by some as an aggression towards the Muslim world, fuelling anti-Western sentiment and giving renewed impetus to extremists at home and abroad."
The report refrained from drawing any firm conclusions on what Iran is attempting with its nuclear programme.
But it noted that Tehran was years away from developing nuclear weapons, even if it wanted to, and that there was plenty of room left for diplomacy.
Blair under pressure
The report adds to pressures on Tony Blair, who has suffered a series of domestic political problems and has faced widespread anger in Britain over his support for the US-led invasion of Iraq.
According to an opinion poll in the UK's Sunday Express newspaper, more than half of Britons believe Blair should leave office immediately.
A survey of 1,014 adults by ICM found 56% of the public want the prime minister to quit now, while 37% back him to stay on.
Two-thirds believe allegations that Blair's governing Labour party offered seats in
More than 70 per cent were also opposed to a decision last week to allow the first "supercasino" to be built in