US Secretary of State John Kerry said that he had a "good meeting" with his Iranian counterpart over Tehran's nuclear programme ahead of July 20 deadline for an agreement.
Monday's talks in Vienna, the Austrian capital, were the second between Kerry and Iranian Foreign Minister Mohammad Javad Zarif as they try to narrow differences in negotiations over the Islamic republic's controversial nuclear programme.
Tehran says it wants to use nuclear power for civilian purposes, but the West fears that it may be aimed at developing nuclear weapons capability.
"We are working. We are working very hard. A lot of serious discussions. It was a good meeting," Kerry told reporters after a two-hour meeting with Zarif and European Union foreign policy chief Catherine Ashton.
The two had also met on Sunday but failed to agree on a deal.
Kerry said there were still substantial gaps with Iran on how to reduce its nuclear fuel-making capacity.
Zarif, meanwhile, said that "our team is ready to work with full speed during the seven remaining days in order to reach a comprehensive deal that can be acceptable for both sides."
Iran has been holding talks with six major world powers - including Britain, France, Germany, China, and Russia - over the decade-old issue with the aim to get Western sanctions that have severely damaged its oil-dependent economy lifted.
With the gaps over pivotal issues including Iran's enrichment capacity still large, some diplomats and experts have said a deal by July 20 is unlikely and that they will need to extend the negotiating period.
However, Ashton's spokesman Michael Mann told reporters that the sides were still trying to get a deal by the target date.
"We are determined to try and get an agreement by July 20. There are still significant gaps and we are trying to narrow those down ... we still have some time. There is a text and there are still brackets around the main issues."
The West wants Iran to significantly scale back its nuclear programme to address its concerns of proliferation risks, while Iran insists its nuclear rights are inalienable.