Washington dropped demands for the International Atomic Energy Agency (IAEA) to have unrestricted access to Iranian sites but upheld a demand that Iran suspend all activities related to uranium enrichment by October 31, according to a copy of the confidential text made available to AFP.

"We're hoping we've found ground for compromise," a US diplomat said of the amendments submitted along with Canada and Australia to a draft resolution presented by Britain, France and Germany.

But a Western diplomat close to the talks told AFP the new proposal was "not a major break from previous drafts" presented by the Americans.

Another diplomat said close US ally Britain was "flummoxed" by the continuing US hard line.

The United States is pushing for a tough resolution that sets a deadline, possibly as soon as October 31, for Tehran to fully suspend uranium enrichment, the process that makes fuel for civilian reactors but also the explosive material for atomic bombs, according to the text.

"We want the resolution to lay out essential and urgent steps for Iran to take," a US official said.

He said the United States saw the deadline as a "trigger," so that if Iran, which claims its nuclear program is a peaceful civilian one, failed to do what was asked, the IAEA would automatically at its next meeting in November refer Tehran to the UN Security Council for possible sanctions.

Britain, France and Germany, however, stress constructive engagement rather than confrontation with Iran.

Their resolution gives Tehran a November deadline to allay concern that it is secretly developing nuclear weapons, but does not say Iran would automatically be taken before the Security Council should it fail to do so.

Some diplomats said the Americans felt they were having trouble negotiating with the so-called Euro 3 because the Europeans were bickering and divided.

"The Euro 3 is a shaky alliance. The Germans are an enormous problem and don't want to do anything" about Iran, a diplomat, who asked not to be identified, said.

But a Western diplomat close to the talks called such comments "ridiculous."

The diplomat said the Euro 3 might "need some time to compare notes and views" but had been united since talks began in Vienna on Monday, adding that the US demands were "drastic" and "do not find the support of anybody."

The United States' top non-proliferation official Under Secretary of State John Bolton was directing this tough line "and he should be redressed," the diplomat said.

Non-aligned states were firmly in support of the European position.

Malaysia's IAEA ambassador Hussein Haniff said they "do not want to see a trigger mechanism because that is pre-emptive."

He said the IAEA should work from reports by its director general Mohamed ElBaradei and "there is nothing in the report that calls for Iran to be referred to the UN Security Council."

A German specialist on Iran Johannes Reissner told AFP in Berlin that "no one in Europe wants sanctions on Iran."

He said France and Britain have oil interests in the country while Germany has other commercial interests there.

Reissner, who works at Berlin's Science and Political Foundation, said the problem was that Iran had a right to enrich uranium, since this is authorized by the nuclear Non-Proliferation Treaty (NPT).

Iran has said it will carry out enrichment under IAEA supervision and in accordance with NPT safeguards.

Haniff said: "Why is the United States so concerned to block this" since the Iranian enrichment would be "a peaceful use under appropriate safeguards."

Iran's powerful former president, Akbar Hashemi Rafsanjani, vowed Wednesday the Islamic republic would resist international efforts to prevent it from mastering advanced nuclear technology.

"The Europeans and the Americans say with determination that Iran must not master nuclear technology and we respond with determination that we reply with determination that we will not renounce our legitimate right," he was quoted as saying by the student news agency ISNA.

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