"The agreement being formulated in Lausanne sends a message that there is no price for aggression and on the contrary -- that Iran's aggression is to be rewarded," he said, referring to Iranian support for Shiite Huthi rebels in Yemen.
"The moderate and responsible countries in the region, especially Israel and also many other countries, will be the first to be hurt by this agreement," said Netanyahu, who has waged a campaign against a nuclear deal with Tehran.
His intervention came as foreign ministers of major powers raced in the Swiss city of Lausanne to beat a midnight Tuesday deadline to nail down a framework deal they hope will put any Iranian atomic bomb out of reach.
"One cannot understand that when forces supported by Iran continue to conquer more ground in Yemen, in Lausanne they are closing their eyes to this aggression," Netanyahu said in a statement issued by his office.
"But we are not closing our eyes and we will continue to act against every threat in every generation, certainly in this generation," said Netanyahu whose country has threatened military action to prevent Iran acquiring a nuclear bomb.
On Sunday, the Israeli premier said the accord under negotiation went further than what his government had feared.
"The dangerous accord which is being negotiated in Lausanne confirms our concerns and even worse," Netanyahu told his cabinet.
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Netanyahu denounced the "Iran-Lausanne-Yemen axis which is dangerous for all of humanity and which must be stopped".
Iran could be in a position to "conquer" the Middle East through what he called the "axis" of control it has over the capitals of Iraq, Lebanon and Syria.
The Israeli leader also said that his country had "strong, bipartisan support" from both Republican and Democratic lawmakers in the United States.
Netanyahu angered the White House in the lead-up to Israel's March 17 general election when he addressed a joint session of Congress to warn against a nuclear deal with Iran.
Foreign ministers from the United States, China, Britain, France, Russia and Germany -- the so-called P5+1 -- met with Iranian negotiators on Monday.
They want Iran to scale back its nuclear programme to give the world ample notice of any dash to make the bomb and end a crisis that has threatened to escalate dangerously for 12 years.
The diplomatically-isolated Islamic republic denies wanting nuclear weapons and is calling for the lifting of sanctions that have strangled its lifeblood oil exports and its access to the global financial system.