After three days of talks, diplomats said Britain, France and Germany hoped to propose a draft text by midnight (2200 GMT) Wednesday for discussion by the 35-nation governors board of the International Atomic Energy Agency (IAEA) on Thursday.

Iranian President Mohammad Khatami warned earlier that Tehran could back away from key commitments if the IAEA takes a hardline stand over its nuclear programme, which Tehran says is solely for generating electric power.

Khatami said Iran would feel "no moral obligation" to keep honoring its suspension of uranium enrichment, or to allow tougher IAEA inspections, if the agency criticizes Iran, which has worked with the IAEA since inspections began in February 2003.

In Vienna, the US ambassador to the IAEA, Kenneth Brill, described the threats as intimidation and said they suggested Iran has something to hide.

He said Iran was trying "to get the (IAEA) board to abdicate its responsibility, "which is to monitor Iran's nuclear activities."

"People who are trying to produce electricity (for peaceful uses as Iran claims) don't engage in these kinds of behavior," Brill said, referring to Iran's efforts to develop advanced P-2 centrifuges capable of making bomb-grade uranium.

Khatami did offer some reassurance by ruling out quitting the nuclear Non-Proliferation Treaty (NPT) mandating IAEA verification of atomic activities worldwide.

"But if the European resolution is adopted in its current form, that means the Europeans do not respect their obligations to us and we will not have any obligations to them," he said.

A working draft has widespread support among Western nations and even non-aligned countries, with more agreement at this board meeting than past ones, diplomats said, noting a shared sense of urgency over the Iranian program.

The United States, which claims that Iran is secretly developing nuclear weapons, wants the IAEA to send the Iranian dossier to the UN Security Council for possible sanctions against the Islamic republic but lacks support for the bid on the agency's board.

The so-called Euro-3 have since October 2003 been seeking better cooperation from Iran, and the draft under discussion in Vienna calls for the IAEA's 15-month-old investigation into Iran's atomic activities to be stepped up and for Tehran to do more to help it complete the probe within a few months.

The main sticking point in the Euro-3 draft is a paragraph that calls on Iran to "reconsider its decisions" to begin tests at a Uranium Conversion Facility, a key step in the nuclear fuel cycle, according to a copy of the text obtained by AFP.

Uranium enriched to high levels by centrifuges can be nuclear fuel but also the explosive for atom bombs.

The head of the Iranian delegation here, Seyed Hossein Mussavian of Iran's Supreme National Security Council, said Iran rejected this clause, noting that uranium conversion is not forbidden by the NPT.

He said Iran had already complied with "three major requests" from the IAEA to provide information and to voluntarily suspend uranium enrichment activities as a confidence-building measure.

Mussavian said Iranians believe the Euro-3 "have not met Iranian expectations" that the IAEA investigation would be brought to an end by June and that Iran would "enjoy the rights of cooperation with other members, to receive peaceful nuclear technology."

But IAEA chief Mohamed ElBaradei said in Vienna on Monday that cooperation from the clerical regime -- lumped into an "axis of evil" by US President George W. Bush -- had so far been "less than satisfactory".

The IAEA is also addressing two other outstanding issues -- contamination of some equipment by highly enriched uranium (HEU) and Iranian research into P-2 centrifuges.

ElBaradei told the board Monday that the two questions remained open, especially since "information provided by Iran with regard to the P-2 centrifuge program, after repeated requests, has been changing and at times contradictory."

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