In talks in Geneva earlier this month, representatives of Britain, France and Germany told Iran that "nothing short of full cessation and dismantling of Iran's fuel cycle efforts would give the EU3 the objective guarantees they need that Iran's nuclear program is peaceful," a diplomat said, reading to AFP reports on the meeting.

On January 17, the EU and Iran held a second round of talks on a potentially lucrative trade pact after a deal clinched in November by the European bloc's three most powerful members -- the so-called EU3 of Britain, France and Germany -- under which Iran would suspend uranium enrichment.

The trade deal forms part of a package of possible incentives Iran could earn if the talks also manage to produce "objective guarantees" the country is not seeking to develop nuclear weapons as charged by the United States.

Iran has agreed to suspend uranium enrichment activities while the talks are in progress. The country insists it only wants to produce fuel for nuclear reactors, but there are fears the sensitive fuel cycle work could be geared towards making weapons.

The diplomat said the EU trio had agreed not to give Iran any "goodies until progress was made in the nuclear working group.

"The nuclear working group is setting the pace for the package of incentives," the diplomat said.