Iran's state television broadcast images on Friday of what it said was debris from a downed US drone recovered inside its territorial waters.
Iran's state television sparked more tension with the US when it broadcast a short clip of a Revolutionary Guards general answering a journalist's questions in front of some of the debris he said has been recovered floating on the surface after Thursday's missile strike.
The downing of the drone - which Washington insists was over international waters but Tehran says was within its airspace - has seen tensions between the two countries spike further after a series of attacks on tankers the US has blamed on Iran.
Trump approves strike and then retracts
US President Donald Trump approved military strikes against Iran in retaliation for the downing of an unmanned surveillance drone, but then pulled back from launching the attacks, the New York Times reports.
Trump had initially approved strikes on a handful of targets such as radar and missile batteries, the paper cited senior administration officials involved in, or briefed on, the deliberations, as saying.
The strikes were set to take place just before dawn on Friday to minimise risk to the Iranian military or to civilians, it added.
Planes were in the air and ships were in position, but no missiles fired, when the order to stand down came, it cited one senior administration official as saying.
The abrupt reversal put a halt to what would have been Trump's third military action against targets in the Middle East, the paper added, saying Trump had struck twice at targets in Syria, in 2017 and 2018.
However, it is not clear whether attacks on Iran might still go forward, the paper said, adding that it was not known if the cancellation of strikes had resulted from Trump changing his mind or administration concerns regarding logistics or strategy.
Iran said on Thursday it had recovered parts of a US spy drone in its territorial waters, after downing the aircraft in a missile strike slammed by President Donald Trump as a "big mistake."
Under pressure to respond to the high-stakes incident in the strategic Strait of Hormuz, where a series of tanker attacks have sent tensions soaring with Iran, Mr Trump initially struck a combative tone.
"Iran made a very big mistake!" he tweeted in response to news Iran had shot down the Global Hawk surveillance aircraft -- which the Pentagon says was above international waters at the time.
"This country will not stand for it, that I can tell you," he repeated later at the White House.
But as the overnight incident whipped up fears of open conflict between the United States and its declared foe Iran - sending crude oil prices up more than six per cent - Mr Trump moved swiftly to dial tensions back down, suggesting the drone may have been shot in error.
"I find it hard to believe it was intentional if you want to know the truth," Mr Trump said. "I think that it could have been somebody who was loose and stupid that did it."
The president's mixed message left the world unsure what Washington's next move would be.
"You will find out," Mr Trump said when asked about possible retaliation.
In Tehran, however, the message came loud and clear.
Late on Thursday foreign minister Mohammad Javad Zarif announced that parts of the drone had been recovered in Iranian territorial waters, as Tehran moved to bring the incident before the United Nations.
"We don't seek war, but will zealously defend our skies, land & waters," Zarif said.
Drone violating or victim?
The Pentagon denounced the strike as an "unprovoked attack" in international air space, claiming the navy drone was some 34km from Iran when destroyed by a surface-to-air missile.
But the Islamic Revolutionary Guard Corps said it brought the drone down as it was "violating Iranian air space" over the waters of Hormozgan province.
Zarif provided coordinates to back the claim.
"At 00:14 US drone took off from UAE in stealth mode & violated Iranian airspace," Zarif tweeted. "It was targeted at 04:05 at the coordinates (25°59'43"N 57°02'25"E) near Kouh-e Mobarak."
"We've retrieved sections of the US military drone in OUR territorial waters where it was shot down."
In a letter addressed to the UN Security Council and Secretary-General Antonio Guterres, Iran protested against a "dangerous and provocative act by the US military forces against the territorial integrity of the Islamic Republic of Iran."
The drone downing came as Iran was already accused by Washington of carrying out explosions on oil tankers in the congested Hormuz area. Tehran denies being behind the attacks but has frequently threatened to block the sea lanes used by shipping to move much of the world's oil exports.
The commander of the US Naval Forces Central Command, Sean Kido, said that a mine allegedly used in one of the attacks matched Iranian weaponry and that incriminating fingerprints had also been collected.
Options 'running out?'
Trump has repeatedly said he does not favour war with Iran unless it is to stop the country getting a nuclear weapon - something Iranian leaders insist they are not pursuing.
But critics of the Trump administration say his policy of "maximum pressure" - including crippling economic sanctions, abandonment of a complex international deal to regulate Iran's nuclear activities, and deployment of the extra sea, air and land forces to the region - make war ever more likely.
In Washington, talk of war has become part of the already heated atmosphere as Trump's reelection fight starts to gain traction.
A key Republican ally of Mr Trump, Senator Lindsey Graham, said the president's "options are running out."
Asked if he believed the countries were nearing conflict, he replied: "I think anybody would believe that we're one step closer."
"They shot down an American asset well within international waters trying to assess the situation. What are you supposed to do?"
One of Mr Trump's biggest opponents, the Democratic speaker of the House of Representatives, Nancy Pelosi, warned that "there's no appetite for wanting to go to war in our country", and Democratic presidential candidate Elizabeth Warren said she is moving to make a war with Iran illegal.
Israeli Prime Minister Benjamin Netanayahu blasted "Iranian aggression" and said "Israel stands by the United States."
But Russian President Vladimir Putin, who has close relations with Iran's leadership, said that US military retaliation against Iran "would be a disaster for the region."
Diplomatic, military brinkmanship
Trump was elected in part on promises to end US involvement in wars in the Middle East, but the president has at the same time made clear his unquestioning support for Iran's big rivals in the region - Israel and Saudi Arabia.
Trump's arrival in the White House, alongside veteran Mideast hawks like his national security adviser John Bolton, has seen a sharp deterioration in relations with Tehran.
Trump began last May by abandoning - and effectively wrecking - a 2015 international agreement on bringing Iran in from the diplomatic cold in exchange for verified controls on its nuclear industry.
That has prompted Iran to threaten it will stop observing restrictions agreed to under the deal on the enrichment of uranium.
The threat has been seen as an effort to pressure European governments that want to save the nuclear deal to push back against Washington. The US State Department called that "extortion."