"If there is any glimmer of hope of resuming negotiations, we must act on it and Italy can play a positive role," D'Alema said when addressing a political convention in the southern town of Telese Terme.

"We can help the international community by putting pressure on the Iranian government," he said.

"We've reached a turning point on Iran and whether the international community decides to impose sanctions or resume negotiations is up to Iran. But I'm hoping we can negotiate," he said.

On Thursday, the Vienna-based International Atomic Energy Agency (IAEA) said Iran had failed to meet the Aug. 31 deadline for halting its controversial nuclear program.

The UN body said Iran had in fact resumed enriching small amounts of uranium.

United States President George W. Bush warned later that there would be consequences for Iran's defiance, saying:" we must not allow Iran to develop a nuclear weapon."

Iran claims it needs to develop atomic energy for electrical needs but Western leaders suspect it is in fact working on a disguised weapons project.

The United Nations Security Council has also ordered it to suspend the work but Iranian President Mahmoud Ahmadinejad has defiantly refused, saying his country has a right to develop "peaceful nuclear technology."