German Nobel literature laureate Günter Grass labelled Israel a threat to "already fragile world peace" in a poem published on Wednesday that drew sharp rebukes at home and from Israel.

In the poem, titled What Must be Said, published in German daily Sueddeutsche Zeitung and Italy's La Repubblica among others, Grass criticises what he describes as western hypocrisy over Israel's own suspected nuclear programme amid speculation it might engage in military action against Iran to stop it building an atomic bomb.

The 84-year-old Grass said he had been prompted to put pen to paper by Berlin's recent decision to sell Israel a submarine able to "send all-destroying warheads where the existence of a single nuclear bomb is unproven".

"The nuclear power Israel is endangering the already fragile world peace," he wrote. His poem specifically criticises Israel's "claim to the right of a first strike" against Iran.

Grass also called for "unhindered and permanent control of Israel's nuclear capability and Iran's atomic facilities through an international body".

Grass did not mention calls for the destruction of Israel that have been made by President Mahmoud Ahmadinejad, but obliquely referred to the Iranian people being "subjugated by a loudmouth".

Israel is widely believed to have an arsenal of nuclear weapons but has never admitted it, pursuing instead an official policy of "ambiguity" to deter potential attackers.

Israel has three Dolphin submarines from Germany – one half-funded and two entirely funded by Berlin – two more are under construction, and the contract for a sixth submarine was signed last month.

Dolphin-class submarines can carry nuclear-tipped missiles, but there is no evidence Israel has armed them with such weapons.

Iran insists it only seeks nuclear power for energy and medical research.

Grass said he long kept silent on Israel's own nuclear programme because his country committed "crimes that are without comparison", but he has come to see that silence as a "burdensome lie and a coercion" whose disregard carries a punishment – "the verdict 'antisemitism' is commonly used".

The left-leaning Grass established himself as a leading literary figure with The Tin Drum, published in 1959, and won the Nobel Prize in 1999. He urged fellow Germans to confront their painful Nazi history in the decades after the second world war.

However, his image suffered when he admitted in his 2006 autobiography that he was drafted into the Waffen-SS, the combat arm of the Nazis' paramilitary organisation, in the final months of the war.

Grass's comments swiftly drew sharp criticism on Wednesday.

"What must also be said is that Israel is the world's only nation whose right to exist is publicly questioned," the Israeli embassy in Germany said in a statement. "We want to live in peace with our neighbours in the region."

"Günter Grass is turning the situation upside-down by defending a brutal regime that not only disregards but openly violates international agreements for many years," said Deidre Berger, director of the American Jewish Committee in Berlin.

"Iran is the threat for world peace – and Israel the only democracy in the entire region, and at the same time the world's only whose right to exist is openly questioned," said Charlotte Knobloch, a former leader of Germany's Jewish community.

The German chancellor, Angela Merkel, is a staunch ally of Israel, and her spokesman reacted coolly to Grass's remarks.

"There is artistic freedom in Germany, and there thankfully also is the freedom of the government not to have to comment on every artistic production," Steffen Seibert said.

The head of the German parliament's foreign affairs committee – lawmaker Ruprecht Polenz, a member of Merkel's Christian Democrats – told the daily Mitteldeutsche Zeitung that Grass was a great author "but he always has difficulties when he speak about politics and mostly gets it wrong".

"The country that worries us is Iran," he was quoted as saying, adding that "his poem distracts attention from that".