At the talks in Moscow the two sides did "not manage to reach concrete decisions aimed at overcoming the crisis," a Russian source involved in the talks said.

In a statement, the Russian contractor Atomstroiexport said "the significant progress that was noted by the two sides earlier has now practically ceased."

"The failure to take steps to renew payments by the Iranian side will lead in the opinion of Atomstroiexport to further delays to the timetable," the statement said.

The continued problems mean that the company will also have to discontinue providing credit for the project, the statement said.

Iran's nuclear energy agency and Russian contractor Atomstroiexport had met since Wednesday in Moscow in an effort to resolve a financial dispute over the building of the Bushehr station.

The project is key to Iran's controversial nuclear ambitions, but has been beset by repeated delays.

Under an existing plan Russia is meant to deliver fuel this month, with the station's reactor starting work in September this year.

But Russia accuses Iran of holding back payments for the work, something Iran denies.

New talks will take place next week in Tehran and the two sides will discuss "not only financing, but firming up of the building schedule and other technical questions," the Russian source said.

The United States, which accuses Iran of intending to use its nuclear programme for military ends, has called on Russia to suspend construction at Bushehr.

Tehran insists that its nuclear programme will be used for civilian purposes only.

Earlier Friday, the deputy chairman of Iran's nuclear energy agency, Mohammad Saidi, said that Atomstroiexport and Russian nuclear agency Rosatom should stick to their contract.

"We hope Atomstroiexport and Rosatom will fulfil their obligations on delivering nuclear fuel by the end of March and ensuring the start of the reactor in September, as foreseen in the contract," ITAR-TASS quoted Saidi as saying on the Vesti television channel.

He denied Iran was at fault for delays, saying that the Russian side "has minor financial problems" and that Iran was ready to offer help.

While Russia is normally seen as close to Tehran, analysts have seen the latest delays as a sign of Russian worries about Iran's intentions.

The delivery of fuel for the project in particular is seen as a decisive step Moscow may be reluctant to take.

In New York, diplomats from the UN Security Council plus Germany were discussing possible new sanctions against Iran, which would tighten measures adopted in December.

The fresh sanctions would include a travel ban on officials involved in illicit nuclear work, barring Iran from exporting arms, financial sanctions and possible restrictions on export credits to Iran, diplomats said.

The December sanctions were adopted by the 15-member Security Council after Tehran refused to freeze a uranium enrichment program that could produce fuel for nuclear power stations but also material to make atomic bombs.

Negotiations on the December resolution dragged on for months, mainly due to efforts by Russia, which has extensive energy and weapons trade with Iran, to water down the measures.

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