The downing of the drone has seen tensions between US and Iran spike further. (FILE PHOTO)

Iran vowed Friday to defend its borders after downing a US drone it insisted had violated the country's airspace, as reports emerged that President Donald Trump had approved then called off retaliatory strikes on Iranian targets.

The downing of the drone -- which Washington insists was above international waters but Iran 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 Tehran.

The commander of the aerospace arm of Iran's elite Revolutionary Guards said the drone was warned twice before it was downed over the Gulf of Oman.

"This aircraft possesses a system which allows it to relay the signals and information it receives to its own central system," Brigadier General Amirali Hajizadeh told state television.

Under pressure to respond to the high-stakes incident near the strategic Strait of Hormuz, Trump issued orders for retaliatory strikes, the New York Times reported.

The US was planning to hit "a handful of Iranian targets, like radar and missile batteries" Thursday evening, the newspaper said, citing senior administration officials.

"The operation was underway in its early stages when it was called off," one official said. "Planes were in the air and ships were in position, but no missiles had been fired when word came to stand down."

White House and Pentagon officials declined to comment, the Times said.

The US president had struck a combative tone in his public comments before rowing back.

"Iran made a very big mistake!" he tweeted in response to news Iran had shot down the Global Hawk surveillance aircraft.

"This country will not stand for it, that I can tell you," he said later at the White House.

But as the pre-dawn incident whipped up fears of open conflict between the United States and its declared foe Iran, Trump moved swiftly to dial back tensions.

"I find it hard to believe it was intentional, if you want to know the truth," Trump said.

Following the president's mixed message, the US special representative on Iran, Brian Hook, called Friday for diplomacy.

"Our diplomacy does not give Iran the right to respond with military force," he told reporters in Saudi Arabia. "Iran needs to meet diplomacy with diplomacy, not military force."

Oil prices edged down slightly Friday following the previous day's surge that saw prices soar more than six percent, while the price of gold -- seen as a safe haven asset -- struck near six-year highs.

Iran said it had called in the Swiss ambassador, whose country has represented US interests since the severance of diplomatic relations in the aftermath of the Islamic revolution of 1979, to issue a formal protest.

Deputy foreign minister Abbas Araghchi provided the ambassador with "indisputable" evidence the drone had violated Iranian airspace, the foreign ministry said.

Araghchi "reiterated that Iran does not seek a war and conflict in the Persian Gulf", but warned: "The Islamic Republic of Iran would not hesitate for a moment to decisively defend its territory against any aggression."

Iranian television later broadcast images of what it said was "debris" of the downed drone recovered from Iran's territorial waters.

"The debris was floating. We recovered it from the sea inside our territorial waters," a general said.

Flights rerouted

The US Federal Aviation Administration warned of danger to flights "demonstrated by the Iranian surface-to-air missile shoot-down of a US unmanned aircraft system", and barred American civilian aircraft from the area "until further notice."

Major non-US airlines including British Airways, KLM, Lufthansa and Qantas said they too were altering flight paths to avoid the sensitive Strait of Hormuz area.

"The incident with the drone is reason not to fly over the Strait of Hormuz for the time being. This is a precautionary measure," Netherlands carrier KLM said.

The Pentagon denounced the "unprovoked attack," claiming the navy drone was 34 kilometres (21 miles) from Iran when destroyed by a surface-to-air missile.

It published a map showing the flight path of the drone, which indicated it travelled outside of Iranian waters and included a photograph showing coordinates when it was downed.

Zarif provided different coordinates for the downing of the drone by a domestically-manufactured Khordad 3 air defence battery.

The drone downing came as Iran was already accused by Washington of carrying out attacks on tankers in the congested shipping lanes heading out of the Gulf through the Strait of Hormuz.

Tehran denies any involvement.

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 Trump critics say his policy of "maximum pressure" -- including abandonment of an international deal to regulate Iran's nuclear activities, crippling economic sanctions and deployment of extra troops to the region -- make war ever more likely.