The agreement "goes in the direction of efforts made by the international community to convince the Iranians to take effective and durable measures necessary to restore confidence," Chirac said.

He was speaking after a meeting with the European Union's foreign policy representative, Javier Solana, at his official Paris residence.

Solana said he was "very happy" with what he saw as EU efforts to curb the development of nuclear weapons in Iran through diplomacy.

Earlier, diplomats at the International Atomic Energy Agency in Vienna said the three EU countries and the United States had worked out an agreement that balanced the hardline US push to condemn Iran for its covert nuclear activities with the European desire to ensure Iran was not scared off from cooperating with the UN agency.

A draft text adopted after five days of intensive discussions was filed late Monday with the IAEA and was expected to be adopted Wednesday by the agency's board of governors.

Diplomats said the document "strongly deplores Iran's past failures and breaches of its obligations to comply with" safeguards set out in the nuclear Non-Proliferation Treaty (NPT).

It did not refer the matter to the Security Council, but rather states that any further breaches would prompt the IAEA to consider "all options at its disposal" -- taken to mean a Security Council condemnation, and possible sanctions.

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