By Dan Williams

TEL AVIV, July 5 (Reuters) - Israel has no plan to station submarines in Eilat, a defence official said on Sunday, playing down speculation the Red Sea port could become a forward base for secret naval operations against Iran.

An Israeli Dolphin-class submarine took part in a drill off Eilat last week, after sailing from the Mediterranean via the Suez Canal -- the first such voyage for the secret craft and a sign of Israel's growing strategic reach, defence sources said.

Witnesses said the vessel docked briefly at Eilat's naval base before departing. But an Israeli defence official said there would be no permanent deployment there of the German-made submarines -- of which Israel has three, with two more on order.

"If anything, we are scaling down our naval operations in Eilat," the official said.

The absence of an Eilat submarine base means a Gulf-bound Dolphin has to use the shallow Suez Canal or sail round Africa, taking weeks and limiting Israel's ability to signal a readiness to retaliate should it ever come under Iranian nuclear attack.

The Dolphins are widely assumed to carry nuclear missiles, though Israel refuses to discuss this. Their conventional weapons could be used should Israel attack Iran's atomic sites, which Tehran insists are for peaceful purposes only.

Eilat is a 10 km (6 mile) strip of coast between Egypt and Jordan, the two Arab states which have peace treaties with Israel.

The lack of space, and fears that the narrow Red Sea could be blockaded at the Straits of Tiran should there be a regional war, led Israel to rule out a full-time Dolphin presence.

"Submarines need the open water, and that's just not available at Eilat," said a senior naval source.

"Also, the navy cannot take on the logistical burden of setting up two bases, with all the specialised needs in terms of equipment, maintenance crews and security safeguards, for a submarine fleet that, at most, will comprise five Dolphins."

At the Dolphins' main base, the Mediterranean port of Haifa, work is under way on covered docks that would allow greater concealment for the submarines, the source said. (Editing by Tim Pearce)

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