Delaying referral for activities which the United States claims hide covert nuclear weapons work was a compromise to win support on the International Atomic Energy Agency's (IAEA) 35-nation board of governors.

However Russia, China and non-aligned nations that say Iran's atomic programme is peaceful still oppose the text, diplomats said.

'Confrontation'

A diplomat close to the IAEA said Iran was ready to submit a note in writing to the IAEA saying that it will begin to enrich uranium, the nuclear reactor fuel that can also be bomb material, and also cease applying a protocol for wider UN inspections if the resolution is actually adopted by the board.

Iran may inform the IAEA that it
will start uranium enrichment

Iran warned on Friday that it would view the IAEA's referring it to the Security Council as a "confrontation", in comments in Vienna by Iranian security official Javad Vaidi.

EU negotiators Britain, France and Germany, as well as the United States, are confident they have enough votes to have the resolution adopted, if consensus cannot be achieved.

Citing Iran for non-compliance, which would require the IAEA to at some point bring the Islamic Republic before the Security Council, would be a major development almost three years into an IAEA investigation that has documented two decades of hidden Iranian nuclear activities.

UN sanctions

Iran's resumption last month of uranium conversion, a first step in making enriched uranium, has set off a crisis in which the United States and the EU want to call in the international weight of the Security Council, which could in principle impose trade sanctions.

"The motion has been tabled and says Iran's many failures and breaches of its obligations to comply with the nuclear Non-Proliferation Treaty constitutes non-compliance," a diplomat told AFP.

The draft resolution by the European trio does not call for an immediate referral of Iran to the Security Council but calls on IAEA chief Mohamed ElBaradei to report on Iran to the board, which will then decide what to do based on IAEA statutes which require notifying the Council, according to the text.

The resolution is bitterly opposed by Russia, which is building Iran's first nuclear reactor, and China, which buys Iranian oil, as well as non-aligned states which see the threat of Security Council referral as an escalation of the crisis.

Tense oil market

The attempt to curb the nuclear activities of Iran, which is a major oil producer, is also coming at a time of enormous tension on world oil markets.

The IAEA board is expected to decide on the resolution on Saturday or Sunday, a Western diplomat close to the IAEA said.

The EU accuses Iran of
concealing its nuclear activities

The board meeting broke up after 20 minutes, with both Russia and non-aligned states saying they needed time to examine the draft, which was submitted by Britain.

The draft says that an IAEA investigation since February 2003 has uncovered a "history of concealment of Iran's nuclear activities".

This "and the resulting absence of confidence that Iran's nuclear programme is exclusively for peaceful purposes have given rise to questions that are within the competence of the Security Council as the organ bearing the main responsibility for the maintenance of international peace and security", the draft, which was tabled by Britain, said.

It also called on Iran "to reconsider the construction of a research reactor moderated by heavy water" and which can make plutonium, which like enriched uranium is a bomb material.

Russian opposition

A Western diplomat said the United States and the EU had enough votes at the 35-nation board to defeat procedural attempts expected by Russia and non-aligned states to stop a meeting this weekend.

Faced with Russian opposition, the European trio backed off on Thursday on seeking to have Iran immediately called before the Security Council, but Russia still objected to a compromise that would have delayed referral, diplomats said.

The compromise text was basically the same as the one tabled on Friday, with some changes made to reassure the Russians.

The board's non-aligned group of 13 countries issued a draft proposal of its own saying verification "should be resolved through peaceful means within the framework of the IAEA" but this was not tabled.

British, French and German foreign ministers consulted on Friday ahead of the board meeting as the crisis deepened.

"The EU-3 held firm," a Western diplomat said.