The United States, which accuses Tehran of seeking to build nuclear weapons, reiterated that Iran may be referred to the UN Security Council. But Russia said dialogue was still the only way forward.

White House spokesman Scott McClellan told reporters that the international community had already warned Tehran that "the next step would be a referral" to the Security Council.

"The possibility of ... sanctions continues to exist. But ... this should be a last resort," said Austrian Chancellor Wolfgang Schussel whose country is the incoming EU president.

Russian Foreign Minister Sergei Ivanov, whose country has a veto in the Security Council, said the issue must be resolved by political means and under the International Atomic Energy Agency (IAEA)'s auspices.

"On the whole I think that this problem ... must be resolved primarily within the political and diplomatic framework, and on the current stage, within the IAEA framework," Ivanov said as broadcast on Russia's First channel.

Iran's announcement of a resumption coincided with the suspension of talks with Russia aimed at seeking a compromise over Iranian uranium enrichment, a key phase in the fuel cycle.

"Today, under the supervision of the agency, research activities will resume," government spokesman Gholam Hossein Elham said, referring to the IAEA, the UN nuclear watchdog.

However, by late Monday there had been no announcement in Tehran of an actual resumption.

Iran has asked the IAEA to have inspectors ready to witness the removal of UN-supervised seals at its research centres, although as the suspension was voluntary, IAEA inspectors are not required to supervise the procedure.

But Hossein Entezami, spokesman for the National Security Council which is in charge of the nuclear file said Iran was counting on the UN watchdog agency's cooperation to resume its research.

"I hope that the agency (IAEA) will do the necessary so that the research activities resume today," he told AFP.

IAEA chief Mohamed ElBaradei said Monday he was "losing patience" with what he called Iran's lack of transparency.

He told Sky News television in an interview recorded before Iran's announcement that he still needed clarification about Tehran's actions.

"There are still a number of important issues where I have not been able to make progress and I still need very much Iran's transparency and Iran's active cooperation," he said.

Europe has warned that the move, which would end a two-year suspension, would jeopardise any resumption of wider talks on ending the crisis with the West over Iran's nuclear activities.

Germany, which along with Britain and France makes up the EU troika leading negotiations with Iran, warned that the decision "cannot remain without consequence".

"This marks a breach of Tehran's commitments," Foreign Minister Frank-Walter Steinmeier said.

And his French counterpart, Philippe Douste-Blazy, urged Iran "to immediately and unconditionally reverse its decision".

But Iran's supreme leader Ayatollah Ali Khamenei voiced defiance, saying Tehran would not give up its nuclear programme.

"The Islamic Republic of Iran will not give up its undeniable rights to peaceful nuclear technology, which has been achieved by the talented youth of the country," Khamenei said in Tehran.

"The ones who are invoking sanctions have sanctioned Iran whenever they could ... such sanctions have no effect," the powerful leader said.

Iran has been trying to draw a distinction between research into the fuel cycle and actual production of enriched uranium, which can be used as fuel in civil reactors or, in highly enriched form, as the explosive core of an atom bomb.

Monday's announcement came after talks between Russia and Iran on a proposed compromise to end the row over uranium enrichment broke off without result Sunday, although they are to resume in a month.

Moscow is proposing that Tehran carry out uranium enrichment on Russian territory to allay Western fears that the technology could allow Iran to produce a nuclear bomb.

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