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The United States will present a 30-day ultimatum to the UN Security Council this week, the Washington Post reported Saturday, calling on Iran to cease with its nuclear program.
It was reported however, that the US would not request further economic sanctions on Iran.
Iran and the European Union inched toward a compromise Friday that diplomats said would allow Tehran to run a scaled-down version of a uranium enrichment program with potential for misuse to develop atomic weapons.
The development was significant because the Europeans and the United States have for years opposed allowing Iran any kind of enrichment capability - a stance that Russia, China and other influential nations have embraced in recent months.
Top European officials - including the foreign ministers of France and Germany - publicly described talks Friday in Vienna as failing because of Tehran's refusal to reimpose a freeze on enrichment.
"Unfortunately we were not able to reach an agreement," French Foreign Minister Philippe Douste-Blazy told reporters. He said the EU continues to demand "full and complete suspension" of uranium enrichment and related activities that have fed fears that Iran may be pursuing nuclear arms.
Germany's Frank-Walter Steinmeier said the meeting ended, after just over two hours, "without achieving a result."
But diplomats familiar with the talks told The Associated Press that after months of deadlock, the two sides explored possible agreement by discussing plans that essentially would allow Iran small-scale enrichment after reimposing its freeze for an undefined period.
The compromise would serve Iran, the European Union and Russia by allowing all of them to say they had achieved their main goals.
Iran would be able to run a program it insists it has a right to under the Nuclear Nonproliferation Treaty, even if it is only on a research basis instead of the full-scale enrichment.
The Europeans, who since 2004 have negotiated for Iran to scrap enrichment, could tolerate small-scale enrichment if Iran first agrees to their key demand - a freeze to re-establish confidence.
Moscow could benefit diplomatically and economically if Iran accepts its plan to move its enrichment program to Russia - except for activities defined as research and development that all sides agree on under any compromise plan.
One of the diplomats - who demanded anonymity in exchange for divulging the substance of the confidential discussion - said the impetus came from Moscow, which has taken the lead in talking to Iran since talks with the Europeans collapsed late last year.
He said Russian Foreign Minister Sergey Lavrov was to float the compromise plan in Washington on Monday and Tuesday to gauge American reaction.
Consensus on such a compromise by the Russians, Europeans and Iranians could leave the Americans with two unpalatable choices.
If Washington accepts the plan, it essentially leaves Iran in a position to develop technology that it could use to make fissile uranium for warheads.
If it refuses, it again could face diplomatic near-isolation on what to do about Iran after months of building the kind of international consensus that last month led the International Atomic Energy Agency's 35-nation board to put the UN Security Council on alert about Iran's suspect nuclear program.
By depriving the Iranians of domestic control of enrichment, the Russian plan - backed by most in the international community including the US and the Europeans - is meant to eliminate the danger that Tehran might misuse it to make the fissile core of nuclear warheads.
Small-scale enrichment under a compromise would deprive Iran of the chance to run the thousands of centrifuges needed to enrich in sufficient amounts to give them material for multiple weapons. But it would allow them to perfect the methodology, should they later decide to start industrial-scale enrichment.
Iran restarted some enrichment activities last month, two years after voluntarily freezing the program during talks with the Europeans. Those talks unraveled late last year.
A report last week by IAEA head Mohamed ElBaradei showed Iran testing centrifuges - machines that spin uranium gas into enriched uranium.
And just a few months down the road, "commencement of the installation of the first 3,000 ... (centrifuges) is planned for the fourth quarter of 2006," the report said.
Experts estimate that Iran already has enough black-market components in storage to build the 1,500 operating centrifuges it would need to make the 20 kilograms (45 pounds) of highly enriched uranium needed for one crude weapon.
Tehran insists it wants enrichment only to generate electricity and that it does not seek nuclear arms, but a growing number of nations share US fears that that is not the case.
While Russia backed alerting the Security Council to Iran, it remains reluctant to press for tough action against Tehran, an economic and strategic partner. Lavrov said Friday that permanent council members were not united on a course of action.
"There is no collectively discussed and agreed strategy of what we all will be doing in the Security Council if the issue is there," Lavrov told foreign reporters, hinting at his country's opposition to increasing pressure on Tehran.
The IAEA's board is to discuss the Iran issue at a meeting beginning Monday, including the ElBaradei report. The board notified the UN Security Council Feb. 4, after Iran refused to heed requests to maintain a suspension on enrichment.
There had been little hope the Vienna meeting would achieve a breakthrough. Both sides had made clear before that they would not move from their positions; the Europeans demanded Tehran freeze all enrichment activities and Iran insisted it would not.
A Russian nuclear agency official, who spoke Thursday on condition of anonymity because he was not authorized to speak to media, confirmed the Moscow talks remained snagged over the same issue - Iran's refusal to freeze enrichment at home.
Still, Lavrov hinted at the chances of compromise detailed to the AP, saying Friday that a deal with Iran was still possible before the IAEA meeting.
"There always is an opportunity to reach an agreement," the Interfax news agency quoted Lavrov as saying in Moscow.
In Vienna, ElBaradei said he was "hopeful" of a negotiated solution after meeting with Iranian nuclear negotiator Ali Larijani, while the Iranian representative to the IAEA, Ali Asghar Soltanieh, described the talks with the Europeans as "fruitful."
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