Jack Straw said the international community was right to press Tehran into giving up its nuclear research because of fears it was a front for developing nuclear weapons.
In a speech to the International Institute for Strategic Studies in London, Straw said it was not too late to resolve the stand-off, outlining four ways of dealing with the issue.
"First, our objective is to exert the pressure needed so that Iran restores a full, verifiable suspension of all enrichment-related and reprocessing activity, and cooperates in full with the (International Atomic Energy Agency)," he said.
"Second, action taken by the Security Council should be incremental, one step at a time, and it should also be reversible so that we could respond to Iranian actions and reactions.
"We should leave the door open for negotiations with Iran to resume at any stage, so they can then come into compliance. Third, we want to maintain the strongest possible international consensus.
"Fourth and finally, the Security Council will be invited to act to reinforce the authority of the IAEA, which will continue to play the central role in monitoring, verifiying and resolving outstanding issues."
The UN Security Council, which could decide on economic sanctions, is expected to meet next week to call on Tehran to comply with an IAEA request to suspend its nuclear programme.