The draft was presented by France during informal consultations on behalf of the three European powers -- Britain, France and Germany -- that have been spearheading nuclear talks with Tehran.

The text is an amended version of a draft that has been under discussion this week by the council's five permanent members -- Britain, China, France, Russia and the United States -- plus Germany.

It "decides that Iran shall suspend all enrichment-related and reprocessing activities, including research and development, to be verified by the IAEA (the UN nuclear watchdog), and suspend the construction of a reactor moderated by heavy water."

The text, which was made available to reporters, invokes articles 39 and 40 of Chapter Seven of the UN charter that stipulate "provisional measures" to be taken ahead of imposing tougher steps such as sanctions.

But it also expresses the council's intention in the event of Iran's non-compliance with the enrichment freeze demand "to adopt such further measures under Article 41 of Chapter Seven as may be necessary to ensure compliance."

Article 41 provides for a broad range of economic sanctions but does not authorize the use of force.

The new text also calls on all states "immediately to take steps to prevent the transfer of any items, materials, goods and technology that could contribute to Iran's enrichment-related and reprocessing activities and ballistic missile programs."

It gives Iran up to an as yet undecided date in August to comply with the UN demands.

Iranian nuclear negotiator Ali Larijani on Thursday stressed that Tehran would take until August 22 to reply to a Western offer of incentives in exchange for freezing its uranium enrichment program.

The draft, similar to one discussed by the council in May, urges Iran "without further delay to take the steps required" by the International Atomic Energy Agency to build confidence in the peaceful nature of the Iranian nuclear program.

The document was discussed in informal consultations early Thursday by the six ambassadors, after which US Ambassador John Bolton reported some headway and said a new private session would be held Friday.

And a Western diplomat reported further progress during a meeting of nuclear experts of the six nations Thursday afternoon, but said an agreement on the draft this week, hoped for by Bolton, was not in the cards.

Western powers believe Iran is trying to build a nuclear bomb under the cover of a peaceful atomic energy program. Tehran denies the charge.

Iran says it only wants to enrich to the low levels needed to make reactor fuel and that this is a right under the nuclear Non-Proliferation Treaty.

Last week, ministers of the six nations agreed at a meeting in Paris to send the Iran nuclear dossier back to the council after Tehran failed to respond to the demand for a uranium enrichment freeze.

And Monday, G8 countries -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- issued a statement at their Saint Petersburg summit calling on Iran to accept a deal for resolving concern over its nuclear program.

The proposed deal calls on Iran to drop plans to enrich uranium itself in exchange for a package of trade, technology, diplomatic and other incentives as well as multilateral talks -- also involving the United States.

But Thursday, Iran again rejected the enrichment freeze demand and warned the Security Council against choosing a "path of confrontation".

In a statement read on state television, Larijani said: "If the path of confrontation is chosen instead of the path of dialogue, and if there is any action to limit the absolute rights of the Iranian people, the Islamic republic will have no choice but to revise its policy."

He accused Washington of trying to derail diplomatic efforts to resolve the crisis.

Russia has meanwhile hardened its stance toward Iran, with Foreign Minister Sergei Lavrov signaling Wednesday that Moscow might agree to sanctions if Iran refuses to budge.

"If the first resolution... doesn't work, we have agreed that after a period it will be necessary to discuss additional measures, including measures of an economic character," Lavrov told Echo Moscow radio.

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