The resolution would urge Iran to "suspend all enrichment-related and reprocessing activities, including research and development, to be verified by the IAEA, and suspend the construction of a reactor moderated by heavy water."

The draft also requests the director general of the International Atomic Energy Agency (IAEA) to submit a report by August on the process of Iranian compliance with the steps required by the IAEA board and with the provisions of the resolution, to the IAEA board of governors and the UN Security Council.

The EU-3 circulated the draft among members of the Security Council who hold informal consultations on Iran in the morning but reached no agreement.

The EU-3 were pushing the council, which was expected to continue its informal talks in the afternoon and on Friday, to make a decision on the draft by the end of this week or no later than next week, said a diplomat at the UN headquarters.

The United States and some of its allies accuse Iran of working on highly enriched uranium and plutonium which are essential materials for making nuclear weapons. Tehran has insisted on its right to develop a peaceful nuclear program aimed at generating electricity only.

EU foreign policy chief Javier Solana on June 6 offered Iran a package of incentives agreed on by the five permanent members of the Security Council -- Britain, China, Russia, France and the United States -- plus Germany, including advanced technology and possibly even nuclear research reactors if Tehran suspended enrichment.

Frustrated by a Iran which refrained from giving an official response to the offer, the six countries agreed on July 12 to return Iran's nuclear issue to the UN Security Council.

Iran has said the package of incentives was an "acceptable basis" for talks.