"I think it's fake news, okay? Now, would I do that? Absolutely. But we have not planned for that," Xinhua quoted Trump as saying to reporters at the White House on Tuesday.
"Hopefully we're not going to have to plan for that. And if we did that, we'd send a hell of a lot more troops than that," he added.
The New York Times reported on Monday that acting Defense Secretary Patrick Shanahan had presented an updated military plan to the Trump administration's senior security officials which envisions sending up to 120,000 troops to the Middle East should Iran attack American forces or accelerate work on nuclear weapons.
The updated plan, which does not call for a land invasion of Iran, was ordered by hardliners led by National Security Adviser John Bolton, reported the paper, citing anonymous sources.
Over the recent weeks, Washington has ratcheted up pressure against Tehran with a series of sanctions, designations and military threats, following Washington's year-long campaign against Iran after US exit from the landmark Iran nuclear deal in May last year.
In response, Iranian President Hassan Rouhani announced on Wednesday Tehran's withdrawal from complying with the restrictions of the Iran nuclear deal on the country's enriched uranium reserves and heavy water supplies.
Iran's supreme leader Ayatollah Ali Khamenei also said on Tuesday that "there is not going to be any war" with the United States, his official website reported.
In a speech to state officials, Khamenei said the showdown between the Islamic republic and the United States was a test of resolve rather than a military encounter.
"This face-off is not military because there is not going to be any war. Neither we nor them (the US) seek war. They know it will not be in their interest," he said, quoted on the Khamenei.ir website.
US Secretary of State Mike Pompeo has also said the United States does not want a war with Iran, amid escalating tensions between the two countries. Speaking in Russia, Pompeo said the US was looking for Iran to behave like a "normal country".
Tensions have escalated after four tankers were damaged off the United Arab Emirates on Sunday.