"I am pleased that Iran seems to be moving in the right direction, but we can't be satisfied" until Tehran has come completely clean about all its nuclear programs and brought any illicit ones to a halt, he said.
Powell was speaking after talks with EU ministers, at which he had been expected to seek support for a sharp denunciation of Tehran from Europeans who are more cautious about criticizing Tehran.
He meanwhile called into question whether the UN's nuclear watchdog the International Atomic Energy Agency (IAEA), whose governing board meets this Thursday, will be able to agree on a resolution on Iran.
He expressed reservations about a draft resolution presented by France, Germany and Britain.
"We had a very candid discussion about the draft resolution. We are studying it. We have some reservations about the resolution drafted that we have seen, and will be in discussion with our European Union colleagues and other members of the IAEA as to whether or not the resolution is strong enough, to convey to the world the difficulties we''ve had with Iran over the years.
"The fact of the matter is that Iran has been in non-compliance," he added.
The US says that Iran is secretly trying to develop nuclear weapons and should be brought before the Security Council but Britain, France and Germany think Iran should not face UN sanctions but be encouraged to cooperate.
"Whether or not we can come up with a resolution that will enjoy the full support of the IAEA board I think that remains to be seen. It will be the subject of intense discussions in Vienna over the next couple of days," he said.