As the agency met on Tehran's alleged nuclear weapons programme, he said Iran had requested to use centrifuge devices for research.

European diplomats said Iran's request goes against promises it made in an agreement with EU negotiators earlier this month in Paris to suspend uranium enrichment, the key step in making what can be fuel for nuclear reactors or in highly refined form the explosive core of atomic bombs.

"We have completed our work with regard to verification of the suspension with regard to one exception and that's the request by Iran to exempt 20 centrifuges for R and D (research and development) without using nuclear materials," ElBaradei told reporters.

Centrifuges aligned in a series known as cascades spin uranium gas at supersonic speeds in order to produce enriched uranium.

"It is not acceptable to us," a European diplomat said of the request, with the International Atomic Energy Agency meeting set to continue Friday, and possibly into the weekend, as the IAEA decides whether to bring Iran before the UN Security Council, which could impose punishing economic sanctions already sought by Washington.

The enrichment freeze was forged in talks with EU negotiators Britain, France and Germany in order to help Tehran show good faith and avoid possible UN sanctions.

Iran was also taking a hardline stance against a draft UN resolution by the European trio in moves which stalled the crucial IAEA meeting on allaying international concern over its nuclear program, which the United States claims is devoted to secretly developing atomic weapons.

In Tehran, Iranian President Mohammad Khatami criticized the draft as "not a good resolution," and Iran rejected a rewritten version circulated Friday afternoon.

The Iranian news agency IRNA quoted an Iranian diplomat in Vienna saying the revised text still called for Iran to be taken to the Security Council if the IAEA decided Iran was violating the suspension, even if the Council is never mentioned in the draft resolution.

The revised text said ElBaradei should "continue verifying that the suspension remains in place and to report without delay to the (IAEA) board should the agency find that the suspension is not fully sustained," according to a copy obtained by AFP.

The United States has for over a year been trying to get the IAEA board to take Iran before the Security Council for almost two decades of hidden nuclear activities, but non-aligned states, as well as the European trio and Russia and China, have opposed this, saying Iran must be given a chance to cooperate with a two-year-old IAEA investigation of its nuclear program.

But Iran keeps on upping the ante, diplomats said.

Iran continued to produce the uranium gas that is the first step in the enrichment process only days before Monday's ban, a move one European diplomat characterized as "not very helpful" as it led to doubts about Iran's intentions and the future of the suspension deal.

Gary Samore, a non-proliferation expert from London's International Institute for Strategic Studies, told AFP the Iranians apparently want to "clear the technical hurdle of running centrifuges together in a cascade."

He said this explains why they want to do research work with a small amount of centrifuges "but what surprises me is that they think they can get away with it."

Several diplomats said the Iranians were merely trying to use the centrifuges as a bargaining chip to get the Europeans to soften the resolution.

Iran maintains its nuclear program is strictly peaceful.

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