The US Navy has been instructed to "shoot down and destroy" Iranian gunboats if they harass its ships, US President Donald Trump said.
Mr Trump's order followed a US accusation last week that Iranian fast vessels were "harassing" US Navy ships in the Arabian Gulf.
The US Fifth Fleet tweeted on April 16 that 11 Iranian vessels had “repeatedly conducted dangerous and harassing approaches", but there were no casualties.
"I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea," Mr Trump tweeted on Wednesday afternoon.
Iran’s paramilitary Islamic Revolutionary Guard Corps on Sunday admitted an encounter with US warships, but claimed without evidence that US forces initiated the incident.
"We advise the Americans to follow international regulations and maritime protocols in the Gulf and to refrain from any adventurism and false and fake stories," the IRGC said on April 19.
"They should be assured that the Revolutionary Guards navy and the powerful armed forces of the Islamic Republic of Iran see the dangerous actions of foreigners in the region as a threat to national security and its red line, and any error in calculation on their part will receive a decisive response."
Lt Pete Pagano, a spokesman for the US Navy’s Fifth Fleet based in Bahrain, said the Navy stood by its earlier description of the incident.
The US Navy released video and photographs of the incident showing small Iranian fast boats coming close to American warships in the northern Arabian Gulf near Kuwait.
Speaking to The National, Secretary of State Mike Pompeo repeated the accusations, saying the US was committed to deterrence in the region.
“Make no mistake about it, the actions that the United States has taken over the last many months have been designed to provide deterrent effect,” he said.
Mr Pompeo said that commitment was shown in the multinational navy task force in Gulf waters to track and protect commercial shipping, and increased military standing in Saudi Arabia.
He said it was also displayed in efforts to bring peace and stability to Yemen, block missile shipments from Iran to the country, and counter Iran-backed militias in Iraq.
“The US is committed to deter Iranian behaviour across the Middle East,” he said.
US Navy ships have been known to fire warning shots at Iranian vessels, an action they took during a spate of close passes by Iranian boats in 2016 and 2017.
While the navy has the authority to act in self-defence, Mr Trump's comments appeared to go further and are likely to stoke tension.
Relations are still tense after the killing of Iranian Quds Force general Qassem Suleimani by a US drone strike in Iraq on January 3.
Iran retaliated on January 8 with a rocket attack on Iraq’s Ain Al Asad base where US forces were stationed.
Mr Trump later retweeted a claim by another Twitter user that the Iranians used harassment of ships as a propaganda tactic.
Referring to his Presidential election rival Joe Biden, who served as vice president under Mr Trump's predecessor Barack Obama, he tweeted: "Sleepy Joe thought this was OK. Not me."
The Iranian state news agency Fars tweeted a still from a 2016 video showing 10 US Navy personnel briefly taken into custody by Iranian authorities.
The announcement of Mr Trump's order came hours after Iran announced a successful satellite launch after four failed attempts in the last year.
The US says the satellite programme a cover for Tehran's ballistic missile development.