Key members of the U.N. Security Council were close to agreement on a draft resolution demanding Iran suspend all nuclear enrichment and reprocessing work and threatening to consider sanctions if it refuses, diplomats said on Tuesday.

Vitaly Churkin (C), Russia's Ambassador to the United Nations, speaks with the media at UN headquarters in New York. Envoys of six major powers reported progress on a UN draft resolution demanding Iran halt uranium enrichment, but said they needed further instructions from their capitals.[AFP]

Negotiations on the resolution have dragged on for 10 days among Germany and the council members with veto power - the United States, Britain, France, Russia and China.

"We made a lot of progress today. This was probably the most productive session. This bring us very close," U.S. Ambassador John Bolton told reporters.

France's U.N. Ambassador Jean-Marc de la Sabliere agreed. "The six should soon be able to present a text to the (Security) Council," perhaps as early as Wednesday, he said.

Britain's deputy ambassador, Karen Pierce was more cautious, saying said the text was not yet complete.

"We are going to look at it overnight, reflect on the points in it, talk to our capitals and come back and talk about it tomorrow (Wednesday)," Pierce said.

Foreign ministers from the negotiators, except for China, are now in Rome trying to work out how to end the violence in Lebanon and Pierce said they might look at the Iran text on the margins of the conference.

Tehran has vigorously objected to the resolution and says its nuclear activities are to produce electrical power only.

The draft is expected to demand Iran suspend all uranium enrichment-related and plutonium reprocessing activities as well as the construction of a heavy-water reactor.

It says that if Iran does not comply with the resolution the council would consider measures under Article 41 of Chapter 7 of the U.N. Charter, which relates to economic and diplomatic sanctions. But it excludes military force.

The date set for compliance is still open but is expected to be at the end of August.

One compromise is that the latest draft is under Chapter 7 of the U.N. Charter, Article 40, which says the council, before taking any action, can call on the those concerned to "comply with such provisional measures as it deems necessary."

Originally, the Western drafters, who fear Iran's nuclear activity is a cover for bomb making, also wanted a reference to a provision in Chapter 7 that refers to threats to international peace and security.

But Bolton said the draft made clear that "Iran is bound mandatorily to suspend its uranium enrichment and reprocessing activities."

At a July 12 meeting in Paris, all six countries agreed Iran had given no indication it would engage seriously on a commercial and technological incentive package offered by major powers in early June, and referred the issue to the council.

Iran is building a heavy-water nuclear reactor at Arak, 120 miles (190 km) southwest of Tehran. Western nations are concerned the plant's plutonium by-product could be used to produce nuclear warheads.