The defence secretary said the UK is “not going to rule out anything” when quizzed on the prospect of a UK military strike on Iran.
He told MPs if British citizens or armed service personnel were killed by Iranian actions, the UK’s response “would no doubt be proportionate”, though gave no details on what it might be.
Mr Wallace was in the Commons answering questions from MPs on Tuesday, amid rising tensions in the Middle East following the US killing of Iran’s top military general Qasem Soleimani in an air strike on Baghdad Airport in Iraq last week.
Acting Liberal Democrat leader Sir Ed Davey asked if the Defence Secretary would rule out any British military action in Iran.
He said: “Given how damaging the Iraq War was to security in the Middle East and given the Government’s support for reducing tension, will the Secretary of State now rule out any British involvement in any attack on any site in Iran?”
Mr Wallace replied: “I’m not going to rule out anything.
“The UK will do what it has to do to defend its persons, its citizens and wherever it needs to do that.
“That is our duty.
“We cannot say what is in the minds of Iran or anybody else in the future and that’s why we will always reserve our right to take that decision at the time of it.”
Former Labour minister Derek Twigg asked what the UK Government’s response would be if British citizens or armed forces personnel were killed by Iran.
In response, Mr Wallace said: “If British civilians were killed, or even military personnel, as a result of Iranian or terrorist action we would look at the response.
“The response would no doubt be proportionate and we will, of course, look at it at the time, if it happened.”
SNP MP Tommy Sheppard asked if there are “any other members or officials of the Iranian Government whose assassination the United Kingdom would find acceptable?”
Mr Wallace responded: “I mean, I don’t know how to start on that question.
“Look, I think the United Kingdom would always seek to follow international law in dealing with threats against it.”
Earlier, Labour leader Jeremy Corbyn accused Prime Minister Boris Johnson of “hiding behind his Defence secretary” by not making the Commons statement himself.
Mr Corbyn said: “Could he tell us where the Prime Minister is and what is he doing that’s so much more important than addressing Parliament on the assassination of Iranian general Qasem Soleimani – an extremely dangerous and aggressive act that risks starting yet another deadly war in the Middle East.”
Responding, Mr Wallace said: “This Prime Minister actually believes in a Cabinet Government and letting the members of the cabinet who are responsible for the policy to come to the House to be able to answer the questions around the policy matter.”
The Defence Secretary also said the UK Government would “call out” any attacks on cultural sites in Iran from “friends or foe”.
SNP defence spokesman Stewart McDonald raised the prospect following a tweet from US President Donald Trump suggesting such a course of action.
He asked Mr Wallace if he agreed such a move would be unlawful under international law.
Responding, Mr Wallace said: “We, of course, would condemn any attacks on heritage sites and do recognise that would be against international law.
“My counterpart Secretary Mark Esper, the US defence secretary, has already clearly said that the US will not target heritage sites.
“And, if anyone was to do that, no matter whether they were friend or foe, we would, of course, call them out on doing that.”