Hours later, the United States said key countries would meet next week to try to develop new U.N. sanctions against Iran.

The International Atomic Energy Agency said in a report to the Security Council and its 35-nation board that Tehran also has continued to build a heavy water reactor and related facilities ¡ª which, along with enrichment ¡ª could help it develop nuclear arms.

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In addition, the report said Iran ignored a Security Council call to cooperate with the IAEA in its efforts to shed light on suspicious nuclear activities.

The conclusions, while widely expected, were important because they could serve as the trigger for the council to start deliberating on new sanctions meant to punish Tehran for its nuclear intransigence.

In Washington, Undersecretary of State Nicholas Burns said he will travel to London on Monday to meet with the United States' negotiating partners to try to draft a new resolution to sanction Iran.

"It is effectively thumbing its nose at the international community," he said of Iran.

Burns said he hopes the United States and other permanent members of the U.N. Security Council, plus Germany, can quickly draft a resolution to "see Iran repudiated again." He said it was too soon to say what provisions the resolution might contain.

In Tehran, the deputy head of Iran's Atomic Energy Organization, Mohammed Saeedi, ruled out suspending enrichment, saying such demands were against Iran's "rights, the Nuclear Nonproliferation Treaty and international regulations."

Ali Ashgar Soltanieh, Tehran's chief delegate to the IAEA, told The Associated Press that sanctions against the Islamic republic only create "more solidarity of the Iranian nation to protect their inalienable rights."

The council issued three demands to Iran on Dec. 23 ¡ª freeze uranium enrichment, stop building heavy water facilities and fully cooperate with the IAEA. It introduced limited sanctions and gave Iran 60 days to comply ¡ª a deadline that expired Wednesday.

The IAEA report prepared by director Mohamed ElBaradei showed Tehran has instead expanded its enrichment efforts ¡ª setting up nearly 1,000 uranium-spinning centrifuges in and above an underground bunker, enriching minute amounts of uranium and bringing nearly 9 tons of the gaseous feedstock into its underground nuclear facility at Natanz in preparation for enrichment.

Iranian officials also informed the agency that they would expand their centrifuge installations to close to 3,000 by May, the report said.

Iran's stated goal is running 54,000 centrifuges at Natanz to churn out enriched uranium ¡ª enough for dozens of nuclear weapons a year.

Iran maintains it only wants to develop enrichment to generate power and says its heavy water facilities at the central city of Arak ¡ª which will produce plutonium, another potential pathway to nuclear arms ¡ª are meant solely to generate isotopes for medical research and other peaceful purposes.

Even before the IAEA report was issued, Secretary of State Condoleezza Rice said the U.S. and its allies would use the Security Council and other "available channels" to bring Tehran back to negotiations over its nuclear program.

British Foreign Minister Margaret Beckett said her country would consult with other Security Council members on the next steps, adding: "We remain determined to prevent Iran acquiring the means to develop nuclear weapons."

The sanctions approved in December banned all countries from supplying Iran with materials and technology that could contribute to its nuclear and missile programs and froze the Iranian assets of 10 key companies and 12 individuals related to those programs.

Russia and China, veto-holding council members with close ties to Iran, are likely to oppose strict economic sanctions or weapons bans. A travel ban was dropped from the initial resolution because of Moscow's opposition, so tough negotiations are expected.

Russia's U.N. Ambassador Vitaly Churkin said Thursday he had "no substantive comment" on the IAEA report but reiterated Moscow's desire for a diplomatically negotiated solution.

"We should not lose sight of the goal ¡ª and the goal is not to have a resolution or to impose sanctions," he said. "The goal is to accomplish a political outcome."

In addition to the sanctions, the U.S. government has been increasing pressure on Tehran on other fronts, arresting Iranian officials in Iraq and persuading European governments and financial institutions to cut ties with the Islamic republic.

With the United States also beefing up naval forces in the Persian Gulf, concerns have grown that Washington might be planning military action against Tehran.

In London, British Prime Minister Tony Blair said "the only sensible way" to solve the crisis was to pursue political solutions, but that he could not "absolutely predict every set of circumstances."

Still, "I know of nobody in Washington that is planning military action on Iran," Blair told British Broadcasting Corp. radio.

The U.S. has said it has no plans to strike Iran militarily ¡ª but has also said all options remain on the table.

The IAEA began probing Iran's nuclear activities more than four years ago, after revelations of nearly 20 years of secret work that included plans to enrich uranium.

Since then, the IAEA has made several worrying finds, such as Iranian experiments with plutonium, unexplained traces of enriched uranium and a 15-page document showing how to mold uranium into the shape of nuclear warheads.