Iran has failed to comply with a UN deadline to halt uranium enrichment, the UN nuclear chief Mohamed ElBaradei said today in a crunch report that opens the door to possible international sanctions against Tehran.

Western diplomats said that they would move quickly to introduce a draft resolution in the United Nations Security Council that would make the UN order against enrichment legally binding.

But, with the issue splitting the major powers that have Security Council vetoes, the reaction from President Bush was measured.

"It’s very important for the Iranians to understand there’s a common desire by a lot of nations of this world to convince them - peacefully convince them - that they ought to give up their weapons ambitions," Mr Bush told reporters at the White House.

The report said that the International Atomic Energy Agency (IAEA) had taken samples on April 13 at Iran’s enrichment facility in Natanz "which tend to confirm as of that date the enrichment level (of 3.6 per cent) declared by Iran".

It said that during March, Iran completed a 164-machine cascade, referring to centrifuges arranged in series in order to enrich uranium, and that another two similar cascades were under construction at the underground enrichment facility.

The confidential report was circulated to Security Council members in New York, where its conclusions had been widely expected. Jack Straw, the Foreign Secretary, said that Britain would ask the Security Council to raise the pressure on Iran.

The world body had set Iran a non-binding, 30-day deadline - running out today - to comply with demands to halt enrichment, which makes the fuel for civilian nuclear reactors, but which can also be the explosive core of atom bombs.

But even as the IAEA delivered its report Iran’s President Mahmoud Ahmadinejad made clear that Iran would not back down.

He told a rally in northwest Iran that "we do not give a damn about such resolutions" and said the Islamic republic could soon become a "superpower."

"Enemies think that by threatening us, launching psychological warfare or imposing embargoes that can dissuade our country from obstaining nuclear technology," he said. "We will not back down one iota."

Mr ElBaradei’s report clears the way to a new phase of diplomacy, with the United States now ready to seek a Security Council resolution legally obliging Iran to meet IAEA demands.

If Iran still refuses, such a resolution could lead to punishing economic sanctions and even military action, although Tehran’s allies and major trading partners Russia and China oppose any such move.

Mr ElBaradei also said in his report that Iran has failed to fully co-operate with UN inspectors trying to determine if Tehran’s nuclear program is peaceful or weapons-related. This request was made in the Council’s presidential statement of March 29.

The report said there had been little progress since a previous assessment and "gaps remain in the agency’s knowledge with respect to the scope and content of Iran’s centrifuge program."

It added that "because of this and other gaps in the agency’s knowledge including the role of the military in Iran’s nuclear program, the agency is unable to make progress in its efforts to provide assurance about the absence of undeclared nuclear material and activities in Iran."

The report also said that Iran had failed to provide "transparency measures" allowing for wider inspections. It also brought up a new item, namely that the IAEA is unable to rule out that Iran may have received plutonium, which is an atomic weapons material, from abroad.

"The agency cannot exclude the possibility, notwithstanding the explanations provided by Iran, that the plutonium analysed by the agency was derived from sources other than the ones declared by Iran," namely domestic experiments, it added.

But Iran has offered to provide a timetable for cooperation with UN nuclear inspectors if the IAEA, rather than the Security Council, oversees Iranian compliance, the report said, citing an 11th hour letter sent by Iran yesterday, on the eve of the deadline.

Diplomats described this as the kind of stalling tactic Iran has used in the past. "Let’s sleep another night on this letter and see what the Iranians after they read the report," said one senior official close to the IAEA.

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