But it left the door open to further negotiations if Tehran complied.

However Iran warned that an accord with the European Union over its nuclear program would become void if the International Atomic Energy Agencyadopted the resolution.

Mohammad Saidi, deputy head of Iran's Atomic Energy Organization, said in Tehran that the resolution was "unacceptable" and that "the Paris accord will become void if the resolution proposed by the Europeans is adopted."

Iran signed an accord with the EU in Paris in November under which it agreed to suspend uranium conversion and enrichment fuel cycle work for the duration of negotiations aimed at securing guarantees that its program is purely peaceful.

The draft resolution also sets a September 3 date for a report on Iran which could lead to a new emergency IAEA meeting and possible referral to the United Nations Security Council for sanctions.

The IAEA's 35-nation board was meeting in emergency session in Vienna a day after Tehran raised the stakes in the crisis over its nuclear program by removing IAEA seals placed on a uranium conversion facility.

Encouraged by Iran, non-aligned nations at the IAEA opposed the draft resolution and forced a half-hour delay in opening Thursday's formal board session, now set for 1330 GMT according to the IAEA spokesman, as intense, closed-door negotiations continued, diplomats said.

"They say they need more time. That is their position. We want a decision today," an EU diplomat told AFP.

The plant at Isfahan carries out the first step in making enriched uranium that can be fuel for power reactors, but can also serve as the raw material for atom bombs.

According to the draft, Iran is urged "to reestablish full suspension of all enrichment-related activities including the production of feed material, including through tests of production at the uranium conversion facility" in Isfahan.

The IAEA is being asked for a consensus adoption of the text from EU negotiators Britain, Germany and France, which stops short of calling for the matter to be taken immediately to the UN Security Council for possible sanctions, as Washington wants.

The proposed resolution comes at a time when the United States and Europe are trying to find a way to rein in Iran while at the same time keep Tehran negotiating with the EU in talks over eight months on giving guarantees that its nuclear program is peaceful.

Washington charges that Iran is secretly developing nuclear weapons.

Iran says it has the right under the Non-Proliferation Treaty (NPT) to make nuclear fuel in a peaceful program and that its suspension of such work since November was a voluntary gesture.

On Wednesday, it defied the international community by making its uranium conversion plant in Isfahan fully operational, but also showed flexibility when hardline President Mahmoud Ahmadinejad said he would put forward new proposals to keep negotiations going.

Analysts suggest Washington might find it hard to garner broad support for sanctions if Iran is taken to the Security Council, with Europe, Russia and China anxious to avoid jeopardizing their access to the country's oil.

At the United Nations, Chinese UN ambassador Wang Guangya said it would not be helpful to haul Iran before the Security Council.

Non-aligned states (NAM) on the IAEA board are strongly opposed to the EU draft resolution but have backed down from such positions in the past.

A senior NAM diplomat told AFP that they "do not want a resolution on Iran", fearing this could isolate Tehran and cause a backlash.

"The problem in the NAM is that Iran is a member of NAM and violently oppposed to pressure being put on them over what they feel is their legal right (to make nuclear fuel), and over a suspension done voluntarily," the diplomat said.

In amendments submitted to the European trio, the NAM delegation crossed out all passages in the text that held Iran to its suspension, according to a copy obtained by AFP.

A senior EU diplomat said the West was "trying to preserve the consensus so far, particularly if there is a second stage," referring to a fresh meeting of the board after the September report.

The diplomat said Western countries, with Russian and Chinese backing this time, "feel the credibility of the board is at stake because Iran has ignored so many of the board's resolutions," including ones last September and November calling on Iran not to make nuclear fuel.