Gregory L. Schulte said Washington "would welcome a report verifying that Iran has suspended its enrichment-related activities" when the International Atomic Energy Agency, the U.N. nuclear watchdog, delivers its latest update by early next week.

"Unfortunately, I don't foresee such a report," Schulte said in a speech at the University of Vienna, calling Iran "a blatant case of noncompliance" with the Nuclear Non-proliferation Treaty.

Agency inspectors who visited Iran's main nuclear facility at Natanz on short notice Sunday found evidence to suggest that it may have overcome technological challenges and has started enriching uranium on a significantly wider scale, The New York Times reported Tuesday.

IAEA chief Mohamed ElBaradei is now arguing that diplomatic efforts to get Iran to suspend enrichment may no longer make sense if the Islamic republic has the technical ability to enrich on a large scale, a diplomat familiar with the inspection process told The Associated Press.

"What he's saying is that we've now crossed a line," said the diplomat, speaking on condition of anonymity because he was not authorized to speak with reporters.

But Schulte said the international community would continue insisting on suspension to contain what he called "activities that really only make sense in the context of a military program."

"Iran continues to defy Security Council demands and shows no sign of planning to comply," he said. "Iran's leadership is actively and defiantly pursuing the technology, material and know-how to produce nuclear weapons."

Iran insists its nuclear program is purely peaceful and geared solely toward producing electricity. The U.S. contends it is covertly trying to build nuclear weapons.

Meanwhile, a former U.N. inspector said Tuesday that Iran is making "slow but steady" progress in its efforts to enrich uranium, but probably still wouldn't have enough fuel for a single nuclear warhead until 2009 at the earliest.

David Albright, who now heads the Washington-based Institute for Science and International Security, said Iran still must overcome some tricky obstacles if it intends to enrich uranium to weapons grade - and it may take tougher sanctions to stop it.

"Iran's been making slow but steady progress," he told the AP in a telephone interview. "We think Iran has been moving faster than (the U.S. government) has anticipated."

Tehran could have 3,000 centrifuges installed by the end of June at Natanz, although it would need several months more to learn how to operate them, Albright said.

He cautioned against concluding that Iran is on the verge of producing an atomic weapon, saying 2009 is the "worst-case scenario" for it to have developed a single warhead.

"Our own assessment has been that they've learned to operate a centrifuge over the last six months. What they haven't done is shown that they know how to operate 1,000 centrifuges," he said.

Centrifuges, which spin at high speeds to make nuclear fuel, are tricky to operate and are subject to breakdown, Albright added, contending Iran "isn't out of the woods yet."

Iran's top nuclear negotiator, Ali Larijani, has agreed to meet European Union foreign policy chief Javier Solana on May 31 to discuss the deadlock over the U.N. demands that Tehran freeze enrichment, Iran's state news agency reported Tuesday.

Abandoning the drive to persuade Tehran to suspend its enrichment activities doesn't make sense, said Albright, who contends the U.S. and its allies would lose their "moral high ground" if they ease up.

"Iran is steadily moving toward nuclear weapons capability, and the negotiations are not working, and we may have to settle into an extended crisis where we need to sanction Iran and further isolate them," he said.

"But this doesn't mean war. ... You have to resist the urge to strike out militarily, which could even be worse than Iran gaining nuclear weaponry," he said.