The U.S. intelligence community now believes North Korea could have a reliable intercontinental ballistic missile (ICBM) capable of carrying a nuclear warhead by sometime next year, U.S. intelligence officials tell CBS News.

The military's Defense Intelligence Agency (DIA) draws the stark conclusion in a new classified report for the government, as first reported Tuesday by The Washington Post. The new assessment shortens the predicted timescale of dictator Kim Jong Un's quest for a nuclear weapon capable of reaching the United States by two years.

While not speaking directly of the classified report, an official from the office of the Director of National Intelligence acknowledged to CBS News that North Korea's recent successful ICBM test launch represented "one of the milestones that we have expected would help refine our timeline and judgments on the threats that Kim Jong Un poses to the continental United States."

"This test, and its impact on our assessments, highlight the threat that North Korea's nuclear and ballistic missile programs pose to the United States, to our allies in the region, and to the whole world," the DNI's National Intelligence Manager for East Asia, Scott Bray, told CBS News on Tuesday, adding that the U.S. intelligence community was "closely monitoring the expanding threat from North Korea."

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While South Korea has cast doubt on one of the North's key claims from the test firing, the Hwasong-14 rocket launched on July 4 is believed to be capable of reaching most of Alaska and possibly deeper into U.S. territory.

The biggest question remaining about North Korea's aggressive nuclear weapons program is when the rogue state will be able to build a nuclear warhead small enough to fit onto an ICBM -- and make an ICBM that can not only fly far enough, but also deliver its payload back into the Earth's atmosphere without incinerating.

Pyongyang claims to have proven the latter technology with the July 4th test, saying the Hwasong-14 demonstrated the vital "re-entry" ability, but there has been no proof. A member of the South Korean legislature's intelligence committee said just a week after the launch that his country did not believe the test had, in fact, demonstrated a re-entry capability.

Parliamentarian Yi Wan-young said during a televised news briefing that South Korea's National Intelligence Service had not been able to confirm that the rocket re-entered the atmosphere.

"Considering how North Korea does not have any testing facilities (for re-entry technology), the agency believes (North Korea) has not yet secured that technology," he said.

The DIA's new assessment appears to address both of the major hurdles still in the way of North Korea's nuclear weapons ambitions -- the miniaturization of a nuclear warhead and the re-entry factor -- by warning that Kim could have a "reliable" nuclear-capable ICBM at some point in 2018.

Both the U.S. and South Korea have warned that the Kim regime's race to develop such a weapon is increasing in pace. The previous estimate was that it would likely take Pyongyang until 2020 to develop a nuclear-armed ICBM.

The "expanding threat from North Korea," as described by the DNI's Bray to CBS News, presents the Trump administration a dramatic challenge as it wrestles with the domestic woes of multiple investigations into purported collusion with Russia and a complicated effort to make good on President Trump's vow to reverse the "Obamacare" health law.

While the White House has made it clear that military options remain on the table, it has stressed the long-standing desire to resolve the nuclear standoff with North Korea through diplomacy. Key to that diplomacy, is convincing China, North Korea's most vital ally and trading partner, to use its leverage with Pyongyang.

Following the ICBM test, U.S. officials said the window for diplomacy was closing, and U.N. Ambassador Nikki Haley spoke about punishing countries like China that trade with the North.

"We will not look exclusively at North Korea. We will look at any country that chooses to do business with this outlaw regime," Haley said. "Much of the burden of enforcing U.N. sanctions rests with China. Ninety percent of trade with North Korea is from China."

But U.S. relations with China are also strained, and Beijing said after Haley's remarks that it shouldn't be held responsible alone for solving the crisis, and accused other countries of shirking their responsibilities in the effort to reduce tensions.

Following a phone conversation between Presidents Xi Jinping and Trump earlier this month, in which the Chinese leader warned of "some negative factors" that were harming China-U.S. relations, China's Foreign Ministry insisted that Beijing does not "hold the key to resolve the issue."

China says perceptions of its influence with North Korea are exaggerated. It also refuses to take measures that might destabilize North Korea's hard-line communist regime and lead to violence, massive flows of refugees into China, and the possibility of a united Korea allied with the United States.

Beijing complained after one of its banks was recently cut off from the U.S. financial system for allegedly helping North Korea launder money, saying other countries' laws shouldn't extend to Chinese entities.

It also bitterly opposes South Korea's deployment of a sophisticated U.S. missile defense system that Beijing says jeopardizes Chinese security because of an ability to monitor missile launches and other military activities within northeastern China.