The Islamic republic was defying international demands to suspend uranium enrichment, a process that can be used to make the fissile material for an atomic bomb, the International Atomic Energy Agency said.

While the United States warned Iran might now face new UN sanctions in the wake of the IAEA's findings, a senior official conceded that current tensions with Russia could complicate matters.

The IAEA, in a restricted report, a copy of which was obtained by AFP, complained it was making little headway in investigating allegations that Tehran had, in the past, been involved in studies to make a nuclear warhead.

The agency "regrettably has not been able to make any substantive progress on the alleged studies and other associated key remaining issues which remain of serious concern," said the report.

The report, circulated to members of the IAEA's board of governors on Monday, was due to be discussed at a board meeting next week.

"On this particular issue, we've arrived at a gridlock," a senior official close to the IAEA said, speaking on condition of anonymity.

The "alleged studies" suggest Iran may have been trying to develop a nuclear warhead, convert uranium and test high explosives and a missile re-entry vehicle.

Information collected by IAEA from a wide number of sources was "of such a quality that Iran has to take it seriously" and had to provide a "substantive response," a UN official said.

"These studies point to real people, real organisation," the official said.

But Iran has dismissed the evidence as "forged" and "fabricated".

In order for progress to be made, Iran "needs to provide the agency with substantive information to support its statements and provide access to relevant documentation and individuals in this regard," the IAEA said.

Failing that, the "agency will not be able to provide credible assurance about the absence of undeclared nuclear material and activities in Iran."

And "contrary to the decisions of the (UN) Security Council," Iran had still not suspended its uranium enrichment activities, the IAEA noted.

Instead, Iran had installed additional cascades of uranium-enriching centrifuges, bringing the number up and running to close to 4,000, and was testing more advanced centrifuges as well.

So far, Iran's enrichment plant in Natanz has produced a total of 480 kilogrammes (1,058 pounds) of low-enriched uranium or LEU, it said.

It would need 1,700 kilogrammes to convert into high-enriched uranium (HEU) for use in an atom bomb, a UN official said.

"That would be a significant quantity, one unit of HEU, and would take of the order of a couple of years, two years," a senior official said.

In Washington, the White House warned that the stalemate in the IAEA's investigation could lead to further sanctions against Iran.

In the summary of the report, IAEA Director General Mohamed ElBaradei urged Iran "to implement all measures required to build confidence in the exclusively peaceful nature of its nuclear programme at the earliest possible date."

In Washington, White House spokeswoman Dana Perino told reporters: "We are working to find out with our allies what the next course of action would be."

Asked what impact the bitter feud between Washington and Moscow would have on securing fresh action in the UN Security Council Perino replied: "I take your point that things might be slightly more complicated now."

Russia, as a permanent member of the Security Council, has power of veto.

Iran, which insists that its nuclear programme is geared solely towards energy generation, is under three sets of UN sanctions over its refusal to freeze enrichment.

In Tehran, Iran's ambassador to the UN atomic watchdog Ali Asghar Soltanieh said his country would continue enriching uranium, the ISNA news agency reported.

"Stating that Iran did not obey the United Nations Security Council resolution asking it to halt uranium enrichment shows this reality -- that Iran found no logical and legal reasons for doing so," Soltanieh said.

"Therefore it cannot give up its undeniable right under the International Atomic Energy Agency (IAEA) charter."

earlier related report
US: Iran courting new sanctions with IAEA stalemate
The White House warned Iran Monday it faces possible new sanctions over its suspect nuclear program, but allowed that US-Russia tensions make seeking new UN action "slightly more complicated."

"We are working to find out with our allies what the next course of action would be," spokeswoman Dana Perino said after the UN atomic watchdog reported it had been unable to make much progress in probing Tehran's nuclear drive.

Asked what impact the bitter feud between Washington and Moscow would have on securing fresh action in the UN Security Council where Russia has a veto power, Perino replied: "I take your point that things might be slightly more complicated now."

"But what I will tell you is that the action that Iran continues to take further isolates its people and its country from the rest of the international community. And I actually don't think that that has changed," she said.

Earlier, the International Atomic Energy Agency charged in a restricted report, a copy of which was seen by AFP, that Iran has not frozen uranium enrichment activities, which can be a key step towards nuclear weapons.

"This report shows once again that Iran is refusing to cooperate with the international community. The Iranian regime's continued defiance only further isolates the Iranian people," said White House spokesman Gordon Johndroe.

"We urge Iran to suspend its uranium enrichment and reprocessing activities or face further implementation of the existing United Nations Security Council sanctions and the possibility of new sanctions," said Johndroe.

The IAEA said in its report that it had "regrettably has not been able to make any substantive progress on the alleged studies and other associated key remaining issues which remain of serious concern."

Iran, under several sets of US and UN sanctions already, denies charges that its civilian nuclear program conceals a covert atomic weaopns drive, and has refused UN demands that it freeze its enrichment programs.

"On this particular issue, we've arrived at a gridlock," a senior official close to the IAEA told reporters, speaking on condition of anonymity.

The so-called "alleged studies" suggest Iran may have been trying to develop a nuclear warhead, convert uranium and test high explosives and a missile re-entry vehicle.

But Iran has so far done little to disprove the allegations, merely dismissing the documentation used to back them up as "forged" and "fabricated," the International Atomic Energy Agency said.

The report is to be discussed by the IAEA's board of governors next week.

IAEA Director General Mohamed ElBaradei "urges Iran to implement all measures required to build confidence in the exclusively peaceful nature of its nuclear program at the earliest possible date," the report concluded.

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