In Washington, US Secretary of State Colin Powell said he was "very satisfied" with the draft resolution from Europe's big three -- Britain, France and Germany -- which he said had sufficient teeth to punish any future Iranian violations of non-proliferation safeguards.
The proposal balances the US call to condemn Iran for almost two decades of covert nuclear activities with the so-called Euro 3's demand that Iran be rewarded for cooperating with the watchdog, the Vienna-based International Atomic Energy Agency (IAEA), since October.
Non-proliferation expert Gary Samore told AFP the resolution was "a good compromise given that the United States, which says Iran is covertly developing nuclear weapons, was never going to get" backing at the IAEA's 35-nation board of governors to take Iran to the UN Security Council, which could impose sanctions.
The United States "had to find a compromise that kept the pressure on Iran. I think this does," said Samore, a former US official now at the International Institute for Strategic Studies think tank in London.
"Basically, the board has given Iran another four months to demonstrate it can carry out commitments," Samore said, referring to the next IAEA board meeting in March.
In Paris, European Union foreign policy representative Javier Solana said he was "very happy" with what he saw as EU efforts to curb the development of nuclear weapons in Iran through diplomacy.
Iran's ambassador to the IAEA, Ali Akbar Salehi, who had said that taking the issue to the Security Council could set off an international crisis, told AFP his country was pleased with the draft resolution.
Iran is "looking for a peaceful resolution of the issue and I think we are on the right track," he said.
The IAEA board had begun its current meeting last Thursday to consider how to respond to a report from its chief Mohamed ElBaradei that Tehran has violated nuclear safeguards for the past 18 years, including making small amounts of plutonium and enriched uranium.
But ElBaradei said there was so far no evidence Iran was working on making nuclear weapons, an assertion Washington, which says Iran is part of an "axis of evil" along with North Korea and Saddam-era Iraq, derided as "simply impossible to believe."
In five days of intense negotiations, the United States dropped demands to take Iran immediately before the Security Council for "non-compliance" with the nuclear Non-Proliferation Treaty (NPT).
But it had still wanted a guarantee that the Council be alerted if Iran's violations continue.
The United States got this guarantee, considered a "trigger mechanism" in the Euro 3's draft.
The clause says that if "any further Iranian failures come to light, the Board of Governors would meet immediately to consider . . . all options at its disposal, in accordance with the IAEA Statute and Iran's Safeguards Agreement," according to a full copy of the draft resolution obtained by AFP.
Diplomats said the Euro 3 had feared that a direct mention of the Security Council could cause Iran to pull back from its October 21 agreement with them to cooperate with the IAEA.
That pact has led to Iran filing a comprehensive report on its nuclear program, pledging to allow wider inspections and suspending the enrichment of uranium.
In return, Iran was promised the issue would not go to the Security Council.
Britain, France and Germany filed their draft resolution late Monday after the IAEA board had suspended its plenary session Friday in order to allow diplomats to bridge the US-Euro 3 divide with negotiations in Vienna and in their national capitals.
The text is now expected to be adopted by consensus when the IAEA board resumes its meeting Wednesday.